The European Security and Markets Authority (ESMA) announced new regulation standards for leveraged trading, which will come into effect on Wednesday 1st August 2018. Please find all details about the regulations and how your trading activities will be affected on this page.
In the beginning of this year ESMA proposed major changes to leveraged trading, which has been intensely discussed within the industry. FCA regulated brokers as well as their clients have been involved in the debate. In early May this year, ESMA announced the details about its new policy, which will come into effect on 1st August 2018. The key changes will be:
– Restricted leverage on spread betting, CFD and forex products,
– Raised stop-out levels to 50%,
– Negative balance protection.
– Restricted Leverage – ESMA Product Groups
Please find ESMA’s proposed leverage changes for each product group in the table below:
|Product Group||Maximum Leverage From|
1 August 2018
|Additional Margin Required For Retail Clients|
|Major FX pairs||30:1||14x|
|Major Indices, Minor FX pairs, GOLD (XAUUSD)||20:1||5x|
|Commodities (excl. Gold) Minor Indices||10:1||10x|
Negative Balance Protection
The new ESMA ruling will ensure that retail traders will not lose more than the money available on their account. If your retail trading account becomes negative, the provider (Cresco Capital Markets(UK) Ltd) will now be required to bring the balance back up to zero. This rule will be applied on 1st August 2018 across all retail CrescoFX trading accounts.
CrescoFX’s Products Listed According to ESMA’s Product Categorization
Below you will find a non-exhaustive overview of Cresco’s product offering and their new leverage requirements. They are listed based on ESMA’s product groups.
|Sub-Category||Major FX||Minor FX||Major Indices||Minor Indices||Bonds||Commodities||Commodities||Crypto||Equities|
|Products||CADJPY||AUDCAD||CAC40||AEX25||Bund||GOLD||BRENT Futures||BTCEUR||UK Equities|
|EURGBP||AUDNOK||DAX30 (Spot and Future)||HK-Shares||CORN Futures||DSHUSD||CH Equities|
|EURJPY||AUDNZD||NAS100 (Spot and Future)||SMI20||COTTON||LTCUSD||NL Equities|
|EURUSD||AUDSGD||SP500 (Spot and Future)||HGC (Copper) Futures||XRPUSD||PL Equities|
|GBPCAD||AUDUSD||UK100 (Spot and Future)||NG (Natural Gas) Futures||ES Equities|
|GBPCHF||CADHKD||WS30 (Spot and Future)||SILVER (Spot & Futures)|
How Will These Changes Affect Your Trading Activities?
Below we would like to provide you some trading examples, which will help you to understand the new ESMA rules better.
The required margin will increase across all products and you will need to add additional funds to your trading account or manage your open positions to avoid being closed out at market.
Working Examples For Clients Trading on FX/CFD Trading Accounts
|Product Group||Maximum Margin from 1 August 2018||Maximum Leverage from 1 August 2018||Additional Margin Required for Retail Clients||Product||Volume||Current Leverage||New Leverage||Current Market Price*||Curent Margin||New Margin|
|Major FX Pairs||3.33%||30:1||14x||EURUSD||1 Lot||400:1||30:1||1.17466||EUR 250.00||EUR 3334.00|
|Major Indices||5%||20:1||5x||DAX30||5 Lot||100:1||20:1||12785.8||EUR 639.29||EUR 3196.45|
|Minor FX pairs||EURNZD||1 Lot||200:1||20:1||1.67345||EUR 500.00||EUR 5000.00|
|GOLD (XAUUSD)||GOLD||0.1 Lot||100:1||20:1||1298.2||USD 12.98||USD 64.92|
|Commodities (exd. Gold)||10%||10:1||10x||WTISPOT||3 Lot||100:1||10:1||65.88||USD 197.64||USD 1976.40|
|Minor indices||ESP35||10 Lot||100:1||10:1||9760.5||EUR 976.05||EUR 9760.50|
|Cryptocurrencies||50%||2:1||-||BTCUSD||0.1 Lot||2:1||2:1||6416.4||USD 320.82||USD 320.82|
|Equities||20%||5:1||4x||BPUK||20 Lot||20:1||5:1||589.11||GBP 589.11||GBP 2356.44|
*Please note that this was the market price at the time the example has been generated.
CrescoFX Professional Clients
The new ESMA margin changes will not affect CrescoFX’s Professional Clients.
In order to find out more about the requirements to become an Elective Professional Client with CrescoFX, please contact us on email@example.com