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July 3, 2018

Fortrade, New ESMA Measures - How will it affect your trading?

Note the change of trading conditions from July 31st, due to ESMA’s new regulation.

As you may know the European Securities and Markets Authority (ESMA) has introduced new measures on Contracts for Differences (CFDs) that will affect all retail clients from 29 July 2018.

These measures include:

  • a 50% margin close out rule on an account level basis;
  • lower leverage limits:
Instrument Current Leverage
(remains for Professional Clients)
New leverage from 29/07/2018
(affecting Retail Clients only)
Major FX Pairs 200:1 30:1
Minor FX Pairs 200:1 20:1
Gold 200:1 20:1
Commodities 100:1 10:1
Major Indices 50:1 20:1
Minor Indices 25:1 10:1
Shares 10:1 5:1
Cryptocurrencies 5:1 2:1

How does this affect your trading?

Example of an account with 500 EUR/USD:

Symbol Trade size Old Leverage Old Required Margin New Leverage New Required Margin
EURUSD €30K 200:1 €150 30:1 €1,000
GOLD ($1,250 per ounce) 5 Oz 200:1 $31.25 20:1 $312.50

These new required margins will only affect Retail Clients.

There are no restrictions for Professional Clients

You can apply to be classified as a Professional Client as long as you fulfil TWO of the below criteria set by the FCA*:

  • You have worked in the financial sector for at least 1 year
  • You have an investment portfolio that exceeds 500,000 € (Cash Savings/Financial Instruments)
  • You have executed an average of 10 trades of significant size in the last 12 months
(*Any Clients not falling within this list are and will remain by default as Retail Clients)

The impact on Existing Retail Client Positions

Any positions you have open before 29th July 2018 in the below instruments will not be affected by the new leverage limits*:

(*However, the close out level will increase to 50%).

Instruments whose open positions will not be affected:

EURUSD GBPUSD
USDJPY USDTRY
EURTRY USDCAD
AUDUSD EURGBP
GOLD CRUDE OIL
SILVER GERMANY 30
USA 500
(Including mini contracts)
WHEAT

The impact on Existing Retail Client Positions

Any positions you have opened before 29th July 2018 in the below instruments will not be affected by the new leverage limits*: (*However, the close out level will increase to 50%).

Instruments whose open positions will not be affected:

EURUSD GBPUSD
USDJPY USDTRY
EURTRY USDCAD
AUDUSD EURGBP
GOLD CRUDE OIL
SILVER GERMANY 30
USA 500
(Including mini contracts)
WHEAT

Any positions you open after 29th July 2018 in the above instruments will be affected by the new leverage limits.

For all other instruments, the leverage limits will affect all positions that remain open on 29th July 2018.

We advise you to make sure your account is adequately funded if you wish to continue trading as a retail client.

How to become a Professional Client

If you would like to take advantage of becoming a Professional Trader, please contact your representative or download their Professional Client application.

To learn more about what it means to become a Professional Client please click here.

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