New ESMA Regulations

New comment
 

Hi,

The new ESMA regulations coming on 1 Aug for all EU/UK traders meaning we can only trade to a max leverage of 1:30. Are there any non EU/UK brokers we can use to trade at a higher leverage?
Thanks
Shaun

 

Forum on trading, automated trading systems and testing trading strategies

ESMA (EU) new regulations for CFDs and binary options to retail investors

Eleni Anna Branou, 2018.06.20 23:11

ESMA has agreed on measures in relation to CFDs. The measures restrict the marketing, distribution or sale of CFDs to retail investors, by providing the following protections:

  • Leverage limits on the opening of a position between 30:1 and 2:1, which vary according to the volatility of the underlying asset:
    • 30:1 for major currency pairs;
    • 20:1 for non-major currency pairs, gold and major equity indices;
    • 10:1 for commodities other than gold and non-major equity indices;
    • 5:1 for individual equities and any underlying not otherwise mentioned;
    • 2:1 for cryptocurrencies;
  • A margin close-out rule on a per account basis;
  • A negative balance protection on a per account basis;
  • A prohibition on benefits and incentivising trading;
  • A standardised risk warning.

The leverage limits imposed on CFDs set the maximum leverage that providers can offer you when opening a CFD position.

With lower leverage limits investors are protected from certain risks.


 
@PennySeven
 

I received this from my broker.


The ESMA rules do not state rolling spot FX specifically, but  this is how ESMA defines a CFD:

 

‘contract for differences’ or ‘CFD’ means a derivative other than an option, future, swap or forward rate agreement, the purpose of which is to give the holder a long or short exposure to fluctuations in the price, level or value of an underlying, irrespective of whether it is traded on a trading venue, and that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;

 

Technically what we offer is called rolling spot forex, not a CFD, but both are covered under this definition. As such, unfortunately, the new leverage rules will apply to your account.


So it seems this will affect all EU/UK traders. So, are there any non EU/UK brokers we can use to trade at a higher leverage?

 
Shaun:

I received this from my broker.


The ESMA rules do not state rolling spot FX specifically, but  this is how ESMA defines a CFD:

 

‘contract for differences’ or ‘CFD’ means a derivative other than an option, future, swap or forward rate agreement, the purpose of which is to give the holder a long or short exposure to fluctuations in the price, level or value of an underlying, irrespective of whether it is traded on a trading venue, and that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event;

 

Technically what we offer is called rolling spot forex, not a CFD, but both are covered under this definition. As such, unfortunately, the new leverage rules will apply to your account.


So it seems this will affect all EU/UK traders. So, are there any non EU/UK brokers we can use to trade at a higher leverage?

Probably yes.

 
Marco vd Heijden:

Probably yes. 

so can you recommend any?

 

This is the response from my broker about leverage on my live real account as from August 1. My broker is one of the biggest in Europe and maybe the world.

"As we are a regulated broker the new leverage will be 1:30 on forex as per the new ESMA regulations."

I only used 1:50 up to now. So, I am not that adversely affected. 

 

I've contacted a few European brokers and you are right, new ESMA regulations does affect normal spot forex trading as well as CFDs.

I didn't know that all spot forex trading is based on CFDs.

The think is that this new ESMA regulations are affecting European based clients as well as brokers, so I don't know if the solution will be an overseas broker.

 
Shaun:

so can you recommend any?

No.

But you might have to move.
 
Comments that do not relate to this topic, have been moved to "Press review".
 
There is an Australian broker named ICM that offer x100 leverage, and Dukascopy Bank from Switzerland still does
12
New comment
Reason: