New ESMA regulation

In early July 2018, the European Securities and Markets Authority (ESMA) will be introducing new regulation aimed at increasing conduct standards across the financial sector.

ESMA adopts final product intervention measures on CFDs

The European Securities and Markets Authority (ESMA) has announced its decision to implement intervention measures which include a limit on the amount of leverage that can be offered to retail traders, a 50% margin close-out rule, and negative balance protection. The ESMA deadline for the implementation of these changes is the 1st of August 2018.

LCG will implement the new measures, which will take effect on clients trading accounts during the weekend of 28th and 29th of July.

Please note that the below mentioned restrictions will not be applicable for professional clients. For more details on the benefits and how to apply to become a professional client please click here.

The product intervention measures ESMA has adopted under Article 40 of the Markets in Financial Instruments Regulation include:

1. Leverage limits on the opening of a position by a retail client from 30:1 to 2:1:

  • • 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;

How will my trading be affected?

The main difference you will experience is an increase in margin requirements. Please see the table below for details on the changes.

Asset class Maximum leverage from July 29th market open
Major FX – currency pairs containing any two of the following: USD, EUR, JPY, GBP, CAD, CHF 30:1
Minor FX – all other currency pairs 20:1
Major indices - UK 100 , Wall Street, Germany 30, US 500, US Tech 100, EU Stocks, France 40, Japan 225, Australia 200, US Dollar Index 20:1
Minor indices – all other indices 10:1
Gold 20:1
Commodities - Silver 10:1
Shares 5:1

2. A margin close out rule on a per account basis. This will standardize the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail client’s open CFDs;

3. Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses;

Trade Responsibly: CFD trading is high risk and may not be suitable for everyone. Losses can exceed your deposits. Risk Disclosure