Leverage Changes for Retail Clients
The European Securities and Markets Authority (ESMA) has officially announced the new leverage limits for Retail clients will come into effect on 1st August 2018. The new limits apply to every broker regulated in the European Union and have a direct impact on the amount of money you need to place a trade. The new leverage limits will apply to both open positions as well as new positions once implemented.
What are the Changes?
The full ESMA document can be read here
but below is a summary of the main changes to your account.
· 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;
Negative Balance Protection: Your account as a whole will no longer be able to lose more than the funds on deposit.
50% Margin Stop Out: This is currently already in place for ECN accounts but it will now also apply to STP and Crypto Accounts which are currently 30% and 15% respectively.
Who is affected by the changes?
The new leverage limits and negative balance protection rules only apply to Retail clients. Professional clients are not affected by the new changes.
If you are classified as a retail client, and you meet 2 of the following 3 criteria, you may be eligible to opt up to become a Professional client.
• You have traded an average of 10 times in each of the last four quarters on CFDs, spread bets or forex in significant size (with FXOpen UK and other providers)
• You hold an investment portfolio (including cash savings and financial instruments) exceeding €500,000 (with FXOpen UK and other providers)
• You have worked for at least one year in the financial sector, in a position that has given you knowledge of Forex, CFD, or spread betting trading
If you meet the requirements and want to enquire about opting up to a professional client status, contact your account manager or [email protected]
If you have any questions regarding this please do not hesitate to contact us and we will be providing further updates on the changes over the coming weeks.
The FXOpen UK Team