HANFA considering prohibition of trading in binary options in Croatia

Published: 10 June 2019

Due to increasing number of queries from citizens, the Croatian Financial Services Supervisory Agency (HANFA) is hereby warning the public to be highly cautious in dealing with contracts for differences (CFDs), binary options and other high-risk financial instruments, especially since trading in such products primarily takes place on-line and via less known foreign brokers.

Recently, there have been cases of trading via websites www.finarix.com and www.x90.com where Croatian citizens lost the funds invested. Quite often, behind such websites there are companies registered in the so-called exotic islands (e.g. Marshall Islands) where legality or regulation of business is questionable.

CFDs and binary options are highly complex products intended solely for speculative trading. At the level of the European Union (EU), pursuant to the decision of the European Securities and Markets Authority (ESMA), a temporary prohibition on trading in binary options for retail investors is in force, while the sale of certain high-risk CFDs is restricted i.e. prohibited.

“These ESMA measures are provisional and their application has been renewed several times. We at HANFA are currently considering the possibility to permanently prohibit the sale of binary options to retail investors in the territory of Croatia, given that our primary objective is to protect Croatian citizens. This proposal will soon be open for public consultation,” said Ante Žigman, President of HANFA Board.

If citizens are contacted by strangers, either by e-mail or by telephone, or if they themselves find websites that offer great profit, it is important that they carefully investigate it, because big promises usually lead to fraud. Besides promises of quick and unrealistic profits, another warning signal is persistent and aggressive soliciting to trading, which is a legally prohibited act. Even properly registered brokerage firms are not allowed to solicit clients to trading, promise profits, or give instructions to clients about which financial instruments to use, save in exceptional cases where investment advisory services are agreed with the client.

If citizens are sufficiently informed and are genuinely interested in trading in such financial instruments, it is important that they confirm who they are in contact with, and whether they are actual employees of a brokerage firm or persons pretending to be such employees, but in reality they are sales representatives of companies who want to gain the trust of potential clients by speaking the local language.

We recommend that people ask for real name and surname of the person calling them, as well as all contact information of the company for which the caller works, and that they subsequently check whether these companies and persons are authorised. It is important to determine the exact name of the company as it often differs from the name of the website used for trading. Companies that operate in a legal and transparent manner have websites with clearly stated corporate information, including contact information, and clearly indicated authorisations by the relevant regulatory authority.

Lists of domestic and foreign brokerage firms authorised to provide trading services in the Republic of Croatia are publicly accessible via HANFA’s website, and every citizen can quickly and easily verify whether a brokerage firm is authorised or not. Access to the registers is free of charge:





In the territory of Croatia, apart from domestic firms, foreign brokerage firms can also engage in trading, but they must be entered in the HANFA register in accordance with a specific procedure. It is important to note that in the event of a dispute, the competent court and legal framework shall be those of the country of the company, and legal framework of that country shall be applied to the business relationship, rather than the Croatian legislation.

Particular attention is needed in cases where companies come from third countries, especially the so-called exotic islands. According to applicable regulations, brokerage firms from third countries may provide brokerage services to retail investors in Croatia solely through a branch established in the Republic of Croatia, with a work authorisation issued by HANFA. Please note that at the moment there are no such branches in the territory of the Republic of Croatia, which means that trade offers from third countries aimed at Croatian citizens are illegal.

Trading via Internet is legal, but only authorised brokerage firms are allowed to engage in it. It is therefore very important that citizens are well aware of risks and characteristics of the financial instruments they plan to trade in, prior to making an investment decision.

Should citizens suspect the identity of the person offering them financial instrument trading services, or believe that they have been offered such services by an unauthorised person, we encourage them to contact HANFA via the email address: info@hanfa.hr, telephone: 01/6173-200 or postal address: HANFA, F. Račkoga 6, 10000 Zagreb.