Sponsored By
de | cn | ru

Market News

ESMA caps leverage at 1:30 from August

 

The European Securities and Markets Authority (ESMA) has announced today that the new restrictions on the provision of contracts for differences (CFDs) to retail investors will take effect as of August, 1. The measures include a leverage cap of 1:30, as well as provision of negative balance protection on a per account basis, among others.

 

Additionally, ESMA also introduces a ban on binary options trading as of July 2, 2018. The new regulations have already been published in the Official Journal of the European Union (OJ) and will remain in force for three months from the date of application.

 

More specifically, the restrictions on the provision of CFDs to retail clients include:

1. A leverage cap, depending on the underlying asset:

· 30:1 for major currency pairs;

· 20:1 for non-major currency pairs, gold and major indices;

· 10:1 for commodities other than gold and non-major equity indices;

· 5:1 for individual equities and other reference values;

· 2:1 for cryptocurrencies;

 

2. A margin close out rule on a per account basis. According to it, CFD providers are required to close out one or more retail client’s open CFDs at 50% of the minimum required margin;

 

3. Negative balance protection on a per account basis. This means that investors cannot lose more than they have deposited;

 

4. A restriction on the incentives offered to trade CFDs;

 

5. A standardized risk warning, including the percentage of losses on a CFD provider’s retail investor accounts.

 

The measures ESMA has taken today are a significant step towards greater investor protection in the EU. The new measures on CFDs will, for the first time, ensure that investors cannot lose more money than they put in, restrict the use of leverage and incentives, and provide understandable risk warnings for investors,” commented ESMA’s Chairperson, Steven Maijoor.

 

The pan-European financial regulator has been planning to introduce a set a restrictions on retail trading in CFDs, as well as a ban on binary options for quite some time. Its plans have been officially announced earlier in March. Although ESMA can only introduce temporary three-month measures (as per the MiFIR,), the regulator will review the results and may impose a further extension for another three months.

TAGS: ESMA  regulation  CFDs  forex brokers  leverage cap 
Broker Country Regulation Platform Min Deposit Review
US CFTC, NFA MT4, Web,
in-house
$50 Review Website
Cyprus CySec, FCA MT4, MT5, Web $5 Review Website
Cyprus, Australia CySec, ASIC MT4, Web,
Mobile app
$100 Review Website
UK, Cyprus, Hong Kong FCA, CySEC, SFC MT4, Web,
PrimeTrader
$100 Review Website
UK, Cyprus, Australia FCA, CySec, ASIC MT4, MT5 $5 Review Website
UK, Australia FCA, ASIC MT4, Trading
Station,
NinjaTrader
$50 Review Website
UK, Cyprus, UAE, South Africa FCA, CySEC, DFSA, FSB MT4, MT5, FxPro
Markets,
cTrader
$100 Review Website
Cyprus CySEC MT4, MT5, Web $1 Review Website
Belize IFSC MT4, MT5 $100 Review Website
Cyprus, South Africa CySec, FSCA, FSC MT4, Web $5 Review Website
UK FCA MT4, AT Pro,
Advantage Web
£100 Review Website
Seychelles FinaCom MT4, Web $10 Review Website

More Forex Market News

SiamOption behind a $22 million investment scam in Thailand

Aug 17 2018 14:25:28

  More than 1.4 million Thai people have lost around $22 million to an investment scam operated through the SiamOption.com website, reported The Phuket News. The Thai police suspects that the mastermind behind the fraud is 37-year old Russian expat Alexey Chikalov. Read more

UK’s FCA warns of unregulated forex broker Gallant Finance

Aug 15 2018 14:30:57

    UK’s Financial Conduct Authority (FCA) has warned the public in an official statement on Tuesday that forex broker Gallant Finance is not authorized to offer its services in the UK. Read more

The Central Bank of Ireland warns against 8888Markets

Aug 14 2018 13:28:01

  The Central Bank of Ireland (CBI), which also serves as a financial services supervisor, issued a warning against 8888Markets on Monday. Read more

UK's FCA warns of Good Crypto and Fair Oaks Crypto clone firms

Aug 09 2018 12:46:34

  UK's Financial Conduct Authority (FCA) has issued warnings against two clones of properly regulated firms: Good Crypto and Fair Oaks Crypto. Read more

Germany’s BaFin orders Stern Options, Stern Markets, and Weiss Finance to halt operations

Aug 08 2018 14:17:08

  The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) has ordered several unauthorised companies to cease trading operations on Tuesday. Namely, these are BP1 LP (Stern options), Gum Ltd. Read more

UK's FCA updates its warning list with Prestige FM, FXFWay and Yes Trading

Aug 07 2018 13:54:48

  The UK Financial Conduct Authority (FCA) added a bunch of unregulated forex brokers to its warning list on Monday. These are Prestige Financial Markets, FXFWay and Yes Trading (Yes Option), which have been targeting UK clients without FCA’s authorization. Read more

UK’s FCA blacklists unregulated forex broker Glenmore Investments

Aug 06 2018 08:44:19

  The UK Financial Conduct Authority (FCA) added GoldTech Media Services OÜ to its ever-growing list of unregulated companies providing financial services in the country. Read more

CySEC slaps fine on InstaForex and ForexMart parent

Aug 03 2018 09:26:17

  The Cyprus Securities and Exchange Commission (‘CySEC’) has imposed a total fine of €130.000 to the owner of InstaForex and ForexMart forex brokers, Instant Trading EU Ltd, for non-compliance with the applicable laws. Read more

US CFTC sues the offshore based forex broker JAFX Ltd.

Aug 01 2018 13:33:55

The Commodity Futures Trading Commission (CFTC) in the US says it has filed a civic enforcement action against a offshore based broker JAFX Ltd., which is registered on the St. Vincent and the Grenadines.   CFTC accuses JAFX Ltd. Read more

UK’s FCA warns brokers not to use products similar to CFDs to get around ESMA’s restrictions

Aug 01 2018 11:15:43

  UK’s financial watchdog has come up with a statement following the entry into force of ESMA’s restrictions on CFD trading, which include a leverage cap of 1:30, among others. Read more

de | cn | ru