EU Securities Markets Authority has recently passed a number of important decisions regarding how investment services related to trading in Forex and CFDs should be provided to retail clients. These decisions are being implemented to safeguard retail clients from excess risks of investing into leveraged instruments.
This article is originally referred from TeleTrade News.
Please note that the measures required by the new regulations only apply to Retail client accounts, and if you are a Professional account holder, neither of the changes below is going to apply to you.
Being an EU financial institution operating under MiFID, TeleTrade-DJ International Consulting Ltd is taking all measures to comply with the new regulations, and TeleTrade hereby notify you of the following important changes in the trading conditions that result from the ESMA (EU) 2018/795 decision and that will be introduced as of July 30, 2018:
- TeleTrade will increase, for all retail client accounts opened on or after July 30, 2018, stop-out level from 20% to 50%
- TeleTrade will improve TeleTrade’s zero balance protection so that it will cancel all negative balances in trading accounts resulting from slippage at SL/Stop-out within seconds of their occurrence, by means of posting offsetting balance correction transactions
- TeleTrade will increase margin requirements for all positions open in retail client accounts on or after July 30, 2018, in line with the new regulatory requirements:
- 3.33% (leverage 1:30) for FX pairs composed of USD, EUR, JPY, GBP, CAD, CHF
- 5% (leverage 1:20) for all other FX pairs, gold, and for UK 100; France 40; Germany 30; Wall Street 30; US Tech 100; US 500; Japan 225; Australia 200; Europe 50 indices
- 10% (leverage 1:10) for all other commodities and ETFs
- 20% (leverage 1:5) for individual stocks
- 50% (leverage 1:2) for cryptocurrencies
TeleTrade’s transition to new trading conditions will require that, beginning July 30, 2018, all currently existing retail client accounts would be put to ‘close only’ mode.
You will be able to close your existing positions at your own will, with no deadlines for closing, but you won’t be able to open new positions in the currently existing accounts.
Once all positions in the existing accounts are closed, such accounts will undergo the change in trading setting to update the margin and stop-out levels, and thereafter you will be able to trade again without restrictions under the conditions updated as per above.
Alternatively, you will be able to open new retail accounts and transfer available balances there to be able to trade immediately, without waiting until the existing positions are closed.
Please note that for any of your existing positions (i.e. those open before July 30, 2018), margin requirements will not change and all your positions will remain as they have been opened, until such positions are closed at your discretion and convenience.
Users of the TeleTrade Invest service should be particularly aware of the important implications of the above changes, namely:
- On July, 29 all retail Investor and Trader accounts in TT Invest will be moved to close-only mode, just as all other retail accounts as per the new regulation. Existing transactions in the investors’ accounts could be closed either in a regular fashion, by means of copying transaction close signals from a respective master, or manually, by the investor himself. No new transactions will be replicated in the existing investor accounts since July 30, 2018.
- Holders of Investor accounts will be able to renew participation in the TeleTrade Invest by either:
- opening a new retail account on or after July 30, 2018, moving there available funds, and connecting to the chosen master, or
- closing all positions in their existing investor accounts, exiting from the TeleTrade Invest project, and then reconnecting to the chosen master, or
- waiting until all transactions are closed by copying from the master, exiting from the TeleTrade Invest project, and then reconnecting to the chosen master.
- All transactions in the retail investor accounts will be executed according to the new retail conditions, i.e. with lower leverage and higher stop-out level. Since masters will be operating with higher leverage and lower stop-out compared to investors, it is important that an investor should monitor their margin levels closely and use a lower replication ratio to mitigate risks of running out of the margin in case of being connected to a master pursuing aggressive strategies. TeleTrade will make available additional lower replication ratio settings to give investors more flexibility in managing their investments.
- TeleTrade will only accept clients with Professional categorization as masters in the TeleTrade Invest project. All master accounts holders that will have not confirmed their Professional categorization, will be moved to Close Only mode, and they will only be able to close existing positions, and then exit from the TeleTrade Invest project, settle with their investors, and then continue trading as a retail client. Master account holders who will have confirmed their Professional categorization will be able to continue trading within the TeleTrade Invest project in the capacity of masters.
TeleTrade would like to note that the above changes and product restrictions are legally required to be implemented for Retail clients, but will not be in effect for clients categorized as Professional.
TeleTrade kindly ask you to refer to your Client Login to check the status of your categorization, and apply to them for any corrections or updates that you feel are warranted.
Original Source: TeleTrade News