As you may already know, the European Securities and Markets Authority (ESMA) announced NEW measures for the provision of contracts for differences (CFDs) to retail investors which will come into effect on August 1st, 2018 for 3 months
. Before the end of the 3 months period, the ESMA measures will be evaluated for next period renewal.
NEW CFDs Measures
The product intervention measures ESMA has agreed under Article 40 of the Markets in Financial Instruments Regulation (MIFIR) include:
Leverage limits on the opening of a position by a retail client from 30:1 to 2:1, which vary according to the volatility of the underlying:
30:1 (3.33% required margin) for major currency pairs (such as EURUSD);
20:1 (5% required margin) for non-major currency pairs (AUDCAD), gold and major indices (such as DOW);
10:1 (10% required margin) for commodities other than gold and non-major equity indices;
5:1 (20% required margin) for individual equities and other reference values;
2:1 (50% required margin) for cryptocurrencies;
A margin close out rule on a per account basis at 50% of the minimum required margin.
Please note that the above changes do not apply for opened positions.
The above changes do not apply to Professional Clients.
Professional Client Status
Professional clients have less restrictions but waive certain retail protections, such as the Investors Compensation Fund. Eligible retail clients have the option to become Professional Clients, upon fulfilling 2 out of the 3 following criteria designed to provide reasonable assurance that the client is capable of making investment decisions and understanding the risks involved:
The client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters.
The size of the client’s financial instrument portfolio, defined as including cash deposits and financial instruments exceeds EUR 500,000.
The client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.
To qualify as a Professional Client,
please click the button below to apply.