Thanks for your #ReplytoESMA

1 August 2018 update

ESMA’s final product intervention measures on CFDs have come into force today. You can find out more on the ESMA website.

27 March 2018 update

In total, 14,605 replies were submitted via this website during the consultation period – with 98.1% against ESMA’s proposals.

ESMA has listened to traders on margin close-out rules and adapted its policy accordingly. A 50% close-out rule will now apply on an account basis, rather than on a position-by-position basis. We’d like to thank all traders who submitted views – your valuable input has resulted in a positive shift for the industry rather than a backwards step.

However, ESMA has chosen to disregard the weight of feeling against the proposed leverage restrictions. As a result, minimum margins on all CFD and spread betting markets will increase across the industry. It is disappointing that ESMA has chosen to ignore the views of traders in this instance, but rest assured we will continue to make the case that these leverage changes are disproportionate.

The changes are expected to come into force from early July 2018. You can still read all the replies received to this site, as well as responses from the industry and a summary of the results.

Read all replies | Summary of results | Read industry responses | Visit the ESMA website

More about this proposal

ESMA is considering a number of proposals aimed at retail clients, to try to increase conduct standards across the industry. While many of the proposals are sensible, this site focuses on the two that are likely to have a significantly negative effect on traders.

ESMA is suggesting the following leverage limits:

  • 30:1 leverage on major currency pairs = 3.33% margin
  • 20:1 leverage on major indices = 5% margin
  • 10:1 leverage on commodities (excluding gold) = 10% margin
  • 5:1 leverage on equities = 20% margin

How could this proposal affect traders?

This proposal would severely increase the margin required to trade. See examples below:

Spread betting

Market - £10/point
Current margin*
ESMA proposed margin
Market - £10/point EUR/USD Current margin* £611 ESMA proposed margin £4,073
Market - £10/point DAX Current margin* £660 ESMA proposed margin £6,600
Market - £10/point Oil - Brent Crude Current margin* £1,035 ESMA proposed margin £6,900
Market - £10/point Apple Current margin* £8,950 ESMA proposed margin £32,800

CFD

Market
Size
Current margin*
ESMA proposed margin
Market EUR/USD Size 1 standard lot Current margin* $611 ESMA proposed margin $4,073
Market DAX Size 1 standard lot Current margin* €1,650 ESMA proposed margin €16,500
Market Oil - Brent Crude Size 1 standard lot Current margin* $1,035 ESMA proposed margin $6,900
Market Apple Size 1,000 shares Current margin* $8,950 ESMA proposed margin $35,800
*Comparison data taken from IG for example purposes.

As a result of these proposals, traders may feel forced into trading less or using unregulated offshore brokers who are not subject to the leverage restrictions.

You can read the proposals in full here, and see what industry leaders have to say about them.

Top replies

Read what other traders have had to say about the proposals.

Ben If ESMA takes leverage way down I will trade through an Australian regulated platform instead, as will, surely, so many others. It will not have the effect that ESMA seems to intend.

Peter It will effectively stop small retail investors being able to trade in these markets. It is an important market for them as the returns are potentially higher. If these measures are implemented it will make traders look at non regulated markets where risk of loss is even higher.​

John The huge increase in margin requirements will significantly reduce the efficiency of market pricing and liquidity, and moreover negate the ability of investors to hedge their investment risks.

Hannes Everyone should be able to use freely under the offered leverage. Risk warnings protect more than enough these days. Over-regulation does not make life easier, but supports brokers who are not under the supervision of ESMA.

Alex This proposal does not in any way contribute to (small) customer safety. In effect, It introduces the maintenance margin call through the back door, disqualifying traders to set their own risk levels. It is patronizing, it is counterproductive to even ESMA’s own objectives and it presents an extra hazard in an already quite challenging environment. The proposal to raise initial margins by a ten-multiplier is bad. The close-out proposal is worse.

Jose I am a small investor happy with the present rules. Don't understand why ESMA wants to change them. The new rules proposal is more confusing, less fair and won't benefit anyone.