NEW ESMA Regulation

In March, the European Securities and Markets Authority (ESMA) announced having agreed on a range of measures intended to harmonise EU-wide regulation and to provide better protection to retail clients trading leveraged products, like CFDs. The new measures will take effect from 30 July 2018.

Leverage caps

Leverage limits apply on opening a new position and vary according to the volatility of the underlying asset. Initial margin requirements will increase on CFD and FX products, meaning the amount of margin collateral required to open a new position will be higher.

Maintenance margin will be introduced and represents the minimum amount of margin collateral that must be held on account to maintain an open position. Maintenance margin will be used to calculate the margin utilisation.

Please note that from 30 July, the new ESMA initial margin rates will apply on the entire margin portfolio when opening a new position, and the new maintenance margin rates will also apply on the entire margin portfolio, including all existing open positions.

As an example, the initial margin requirement on non-major FX pairs will go from our current 2% margin rate (50:1 leverage) to 5% (20:1).

Everything you need to know

  • ASSETS
  • FX (Majors)
  • FX (Minors
  • Index (Majors)
  • Index (Minors)
  • Gold
  • Commodity
  • Equity
  • CURRENT INITIAL MARGIN
  • 1.5%
  • 2.0%
  • 2.5%
  • 3.0%
  • 3.0%
  • 2.0%
  • 10.0%
  • INITIAL MARGIN – 30 JULY
  • 3.33%
  • 5.0%
  • 5.0%
  • 10.0%
  • 5.0%
  • 10.0%
  • 20.0%
  • MAINTENANCE MARGIN – 30 JULY
  • 1.66%
  • 2.5%
  • 2.5%
  • 5.0%
  • 2.5%
  • 5.0%
  • 10.0%

Margin close out

The margin rate required to maintain an open position is referred to as maintenance margin. Maintenance margin is used to calculate the margin utilisation.

If your account breaches 100% utilisation, then automatic margin close–out will occur, meaning that orders to close positions will be placed and existing orders will be cancelled.

Negative balance protection

Negative balance protection will be applied to accounts that hold an open FX Spot or CFD position and will apply to any loss after any/all collateral on an account has been used, including cash deposits.

We will reimburse the negative cash amount once all positions held on account settle. The reimbursement will reset the account value to zero.

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