Article 40 of the MiFIR Regulation (EU No 600/2014) grants ESMA the power to temporarily prohibit or restrict the marketing, distribution or sale of certain financial instruments in the EU. This power is conditional on three cumulative criteria: a significant threat to investors or markets, the inadequacy of existing regulations, and the ineffectiveness of national authorities. The maximum duration of an ESMA measure is three months, renewable.

Under Article 40 of the MiFIR Regulation, the maximum duration of an ESMA intervention measure is limited to three months. This measure can be renewed if necessary, but it remains temporary by nature. For example, the initial measures on binary options and CFDs were renewed several times in 2018 and 2019 to maintain investor protection while national authorities adopted their own permanent measures.

Article 43 of the MiFIR Regulation gives ESMA a coordination and facilitation role for national authorities' intervention measures. It can recommend that other authorities adopt similar measures and facilitate their harmonised implementation. For example, in June 2021, ESMA endorsed the Dutch AFM's measures on turbos, illustrating this coordination role.

For ESMA to exercise its intervention power under Article 40, three conditions must be met simultaneously: there must be a significant threat to investor protection or market functioning; existing regulations must be inadequate to address this threat; and national authorities must have been insufficiently responsive or effective. These criteria ensure that ESMA's exceptional power is used only when necessary and proportionate.

The MiFIR Regulation clearly distinguishes between ESMA's powers, which are temporary and apply across the entire EU, and those of national authorities, which can be permanent and limited to their jurisdiction. For example, ESMA's temporary intervention power under Article 40 contrasts with the permanent power of national authorities under Article 42. ESMA also plays a coordination role (Article 43) to facilitate the adoption of similar measures by other authorities.

Under the MiFIR Regulation, national authorities must notify ESMA and other national authorities of their proposed intervention measures at least one month before the planned entry into force. This procedure allows ESMA to issue a formal opinion on whether the proposed measure is justified and proportionate. For example, the AMF notified its proposed ban on binary options one month before its implementation in July 2019.

Under Article 40 of the MiFIR Regulation, ESMA intervention measures take precedence over pre-existing national measures on the same subject. This means that when an ESMA measure is in force, it applies across the EU and supersedes any existing national measure on the same subject. For example, the CFD restrictions imposed by ESMA in 2018 temporarily replaced national measures until those were adapted.

Decision (EU) 2018/795, adopted by ESMA on 22 May 2018, imposed a total ban on the marketing of binary options to retail investors across the European Union from 2 July 2018. This measure was renewed several times to maintain investor protection while awaiting permanent measures from national authorities.