ESMA leverage restriction

[553FO2H718]

ESMA has imposed a new leverage restriction and it applies to the EU forex brokers. From August 1, 2018 they'll only be able to offer a 30:1 leverage for major pairs, 20:1 for non-major pairs and gold. This means that we will be offered less leverage than what our American friends are being offered.

Currently the only solution to keep trading with higher leverage is to close your account and open a new one with a non EU regulated entity. It's another question for another day whether ESMA will stop this by preventing EU residents from opening non EU accounts, just like the CFTC/SEC prohibits Americans from opening non US brokerage accounts.

What are you going to do now? Are you going to keep your EU brokerage account and trade with the 30:1 or 20:1 leverage or you're going to close your account and open one outside the EU to avoid the restriction?

What are you going to do if ESMA is going to prevent you from having a non EU brokerage account?

Source: https://www.esma.europa.eu/press-ne...intervention-measures-cfds-and-binary-options

 

[tomorton]

I am waiting to see how the reduced leverage affects my trading. If necessary, I will adapt my trading style rather than go outside the protection of the UK FCA. At this point its hard to think the loss of leverage alone would eliminate all profit.

 

[fordewind]

Should`ve been done long ago.

 

[553FO2H718]

I am waiting to see how the reduced leverage affects my trading. If necessary, I will adapt my trading style rather than go outside the protection of the UK FCA. At this point its hard to think the loss of leverage alone would eliminate all profit.

What does the FCA give you that other regulators in other jurisdictions can't? The deposit protection has its limitations.

Should`ve been done long ago.

What do you gain by limiting the leverage for others, how do you personally benefit by telling others how to do their business?

 

[fordewind]

What does the FCA give you that other regulators in other jurisdictions can't? The deposit protection has its limitations.


What do you gain by limiting the leverage for others, how do you personally benefit by telling others how to do their business?

What do you...Who you?I`m not a broker.Brokerages will gain more money from deleveraging.Leverage is an evil after all.

 

[tomorton]

What does the FCA give you that other regulators in other jurisdictions can't? The deposit protection has its limitations.....

The specific protections I value via the FCA are client's deposit protection up to (I think) £85k, and segregation of clients's deposits from company operating funds. The firm's operations and financial security is also overseen by the FCA, ensuring it is trading with controlled financial risk and that is is actually a trading company, and not simply a phoney set up to bank deposits and then fold. In more general terms, as they are UK-based I would have the applicable customer rights in law of contract etc. which I could enforce privately if necessary which would be non-existent or difficult to utilise of the firm were based in let's say North Cyprus. In more general terms, the UK is also noted as one of the least corrupt jurisdictions in which to be involved in business.

 

[553FO2H718]

What do you...Who you?I`m not a broker.Brokerages will gain more money from deleveraging.Leverage is an evil after all.

I don't get it. Every single broker has just announced their revised forecast because of the leverage restrictions and they're going to have less revenue, less profit and they're going to pay less tax. Also they said that a big number of their costumers are already migrating their accounts to non EU countries so those brokerage companies are going to lose their costumers who doesn't have non EU subsidiaries. Let's say a British fx broker has a subsidiary in Dubai and they move those costumer accounts there who need more leverage. It's a loss for the British workforce, the British banks, the HMRC (tax authority) and to the economy because many brokerage companies are going to close.

The specific protections I value via the FCA are client's deposit protection up to (I think) £85k, and segregation of clients's deposits from company operating funds. The firm's operations and financial security is also overseen by the FCA, ensuring it is trading with controlled financial risk and that is is actually a trading company, and not simply a phoney set up to bank deposits and then fold. In more general terms, as they are UK-based I would have the applicable customer rights in law of contract etc. which I could enforce privately if necessary which would be non-existent or difficult to utilise of the firm were based in let's say North Cyprus. In more general terms, the UK is also noted as one of the least corrupt jurisdictions in which to be involved in business.

That's a valid reason so I do understand your point although UK is certainly not the only transparent and corruption-free jurisdiction. You can have the same (if not better) terms elsewhere. There are countries between the UK and Northern Cyprus. Switzerland is another example just to name one but Google is your friend if one day you'd need higher leverage and same or better regulation.

 

[fordewind]

Brokers dont make money from idiots with 1:500 leverage.

 

[553FO2H718]

Brokers dont make money from idiots with 1:500 leverage.

I guess you don't understand the way leverage works and yes, they do make money from people who use more leverage. You're not arguing with me, but with them. Just read CMC Market's, Admiral Market's, IG Market's, etc. revised forecasts and complaints. Their costumers already began moving elsewhere. These are huge companies and they're going to lose hundreds of millions each year and that means less tax revenue and less employees in the UK. They'll expand oversees though. Many has already applied for a license in the UAE.

 

[fordewind]

I guess you don't understand the way leverage works and yes, they do make money from people who use more leverage. You're not arguing with me, but with them. Just read CMC Market's, Admiral Market's, IG Market's, etc. revised forecasts and complaints. Their costumers already began moving elsewhere. These are huge companies and they're going to lose hundreds of millions each year and that means less tax revenue and less employees in the UK. They'll expand oversees though. Many has already applied for a license in the UAE.

I dont need to read forecasts, i have a broker friend.He doesnt make shit from the $25 bucks accounts with insane leverage.