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February 23, 2021

PatronFX, How to become a professional FX client? - ESMA Directive

Details of the directive of the European Securities and Markets Authority (ESMA).

How-to-become-a-professional-FX-client--ESMA-Directive How-to-become-a-professional-FX-client--ESMA-Directive

Note that PatronFX accepts clients from only United Kingdom, Germany, Poland, Czech Republic, Italy, Netherlands, Switzerland, and Austria.

How to apply for professional client classification?

The directive of the European Securities and Markets Authority (ESMA) has introduced restrictions on leverage and margin calls, which has come into effect on August 1, 2018.

These measures include lower leverage, a specific margin closure rule, restrictions on trading benefits, etc.

CFDs are complex financial instruments and carry a high risk of losing money quickly due to leverage.

Professional clients use more leverage, which increases this risk.

You should carefully consider whether you can afford to take the risk of voluntarily becoming a professional-client.

*Note that professional clients are not eligible for ICF compensation.

Become a Professional Client of PatronFX

The aim of the Investor Compensation Fund (ICF) is to secure claims of private customers through a payment (up to € 20,000) in cases in which PatronFX does not meet the obligations to you and if certain conditions are met.

What’s the merit of becoming a Professional Client?

If you are classified as a professional customer, the following applies:

Protection against negative balance
You never lose more than your deposited balance.
Access to premium service
Personal support from our PatronFX account manager.
Dedicated account manager
Continuation of personal support from your PatronFX account manager.
Access to VIP Platinum Education Center
Benefit from PatronFX’s professional trading training
Balance security
Your credit remains in a separate bank account.

The European Securities and Markets Authority (ESMA) has laid down measures for the offering of Contracts for Differences (CFDs) for retail investors in the Official Journal of the European Union (OJ), which has come into effect on August 1st.

Go to PatronFX’s Official Website

Update on Stop Out and Margin Call Levels

The stop-out level will be 50% on all PatronFX platforms.

From August 1, 2018, the stop-out levels on all PatronFX platforms will be 50% for all customers.

Customers who have open positions and a margin level between 20-50% are most likely to hit stop-out levels.

For example:

Account currency = USD, account leverage 1:50

On 7/27/2018 you are going long with one lot of GOLD for $ 1225. The required margin is 2450 USD ((1 * 100 * 1225) / 50), which corresponds to (contract size * lot value) / leverage).

At the end of the day, on 7/27/2018, the balance in your account is 980 USD and the margin level is therefore 40% (= balance / margin * 100 = 980 / 2,450 * 100).

At the stop-out level of 20%, your position will remain open because the margin level (40%) is more than 20%.

On July 30, 2018, the stop-out level increased to 50% and since the current margin level of 40% is below this value, the customer would have already been stopped (the position would have already been closed).

Contact PatronFX’s Support Team

Requirements to become a Professional Client

You can become a professional trader if you send them an application and meet two of the following three criteria, among others:

Trading Volume
You have executed significant size transactions in the relevant market at an average frequency of 10 per quarter (with Forex TB Limited and/or other providers) in the last 4 quarters.
Relevant Experience
You have at least one year of experience as a finance professional that requires a clear understanding of the CFD market and its services.
Financial Status
The size of your portfolio is or is greater than EUR 500,000, including cash and financial instruments.

You can decide whether you want to send your application now or later or whether you want to continue to be treated as a private customer.

Please note that you can be re-classified as a private customer at any time after you have been classified as a professional customer.

Financial instruments include stocks, cash deposits in funds, or profits from investments in derivatives, debt instruments, and cash deposits. Real estate, traditional holdings of raw materials, or a fictitious value of derivative instruments are not included.

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