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Attachments: FX Trading in Europe under threat - act now
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FX Trading in Europe under threat - act now

  • Post #1
  • Quote
  • First Post: Edited Jan 24, 2018 7:05pm Jan 19, 2018 11:23am | Edited Jan 24, 2018 7:05pm
OK now I've got your attention, ESMA are proposing to cap leverage as low as 5 to 1 across the whole of Europe. This isn't a joke, this will kill the industry and trading as we know it. The brokers are encouraging everyone to voice your concerns to ESMA during the consultation period which lasts until 5 Feb.

DO IT!


Even if you've never protested at anything before, get off your backside and go through the process below.

Be calm, think about what you're saying.

Explain how reducing leverage will lead to growth of unregulated brokers outside of the EU, and as a client you will happily move brokers that offer decent leverage.
*
Explain why 50:1 (or whatever you think) is a better cap for leverage. One reason is that in combination with negative balance protection, it will allow brokerages to set the appropriate leverage relative to current volatility conditions, as opposed to a centralised control which is static and inflexible.


These regulations WILL have huge unintended consequences.


HOW TO PROVIDE YOUR FEEDBACK TO ESMA
ESMA has very specific requirements when submitting your views. Below are the steps:


1) Visit ESMA’s consultation page
https://www.esma.europa.eu/press-new...ures-contracts

2) Download the “Call for Evidence” Form located under “Related Documents”.

3) Open Microsoft Word or any similar program to provide your feedback.

4) Copy and paste questions from Page 9 of the proposal to Microsoft Word. You do not have to answer each question but we recommend at least answering letters “B” and “I.”

5) Save your Word document.

6) Upload your Word document under “Response Form” and fill in your details.

7) Click “Respond.”

* Deleted: the number of brokers are limited outside of EU.
Well done mate.

Don't waste time contacting the FCA. I spoke with them by phone and they would only say they will await the ESMA leverage etc. requirements and must comply with them. I'm not sure I believe that 100% - it seems likely the FCA will have a right to apply for an exemption if there are particular local circumstances, but they won't discuss that with me.

My SB company say they also await any new ESMA restrictions same, and will simply comply, though I am encouraging them to respond to the ESMA consultation.

By the way, the ESMA definition of CFD's could include financial SB, though this is not mentioned specifically by name in their consultation document, announcement or press release.
Quoting triphop
OK now I've got your attention, ESMA are proposing to cap leverage as low as 5 to 1 across the whole of Europe. This isn't a joke, this will kill the industry and trading as we know it. The brokers are encouraging everyone to voice your concerns to ESMA during the consultation period which lasts until 5 Feb. DO IT! Even if you've never protested at anything before, get off your backside and go through the process below. Be calm, think about what you're saying. Explain how reducing leverage will lead to growth of unregulated brokers outside of the...
Yep it's happening. 2 of my brokers here in UK are asking us to apply for pro accounts which will allow more realistic leverage but at a cost and effect to present conditions.not sure how stringent the application is to satisfy gas rules but I do know it requires much larger account size and background history of this industry.
Tomorton - Cheers mate. I'm sure it'll encompass everything. Even if it's not specified right now, they won't leave anything unchecked.

Diceman - Eeesh. I've seen a few sham consultations before in gov but I think the terms really are still up for negotiation. Def. worth every european trader at least giving feedback. It's all we can do ...
Well done mate for the information.

KP
Do your homework, follow the footprints of smart money
I told you guys - the fx game will be over soon! Your voice is irrelevant. They already made the decision. THEY want to get rid of the current financial system. THEY want to get rid of CASH. THEY want centralized electronic fiat.

Look around! These regulations are global! Japan, USA, Russia, Turkey and NOW EUROPE!. WAKE UP!

THEY don't want YOU to speculate with financial instruments. WHO ARE THEY?? You know who they are! I can't say their name because they will delete my post.

Forex is the only legal regulated market with such low entry barrier. This is temporary anomaly. Now the gap is closing.

The good news is that there is a new type of market which will replace FX. Crypto currencies. This will be the new game for us. And what's even better - the governments and the regulators can't put their dirty hands on crypto. They don't even understand the technology yet.

Simply forget about forex.
Quoting triphop
OK now I've got your attention, ESMA are proposing to cap leverage as low as 5 to 1 across the whole of Europe.
According to this article the proposal is to still apply a cap of 1:30 to currencies. Unless I've missed something in the ESMA document the 1:5 cap seems to only apply to Cryptos.
Quoting alphaomega
I told you guys - the fx game will be over soon! Your voice is irrelevant. They already made the decision. THEY want to get rid of the current financial system. THEY want to get rid of CASH. THEY want centralized electronic fiat. Look around! These regulations are global! Japan, USA, Russia, Turkey and NOW EUROPE!. WAKE UP! THEY don't want YOU to speculate with financial instruments. WHO ARE THEY?? You know who they are! I can't say their name because they will delete my post. Forex is the only legal regulated market with such low entry barrier....
Right.. because the crypto currency markets are transparent and not dominated by parties controlling 10%+ of the market behind the curtains. You can think that there is a great technology behind some of the crypto currencies out there, but quite frankly this kind of knowledge does not matter when markets are manipulated that easily. In my opinion forex is definitely the more safe option, when comparing it to crypto currency speculation. I rather trade consistently in a transparent, regulated market (mifid II), backed up by solid fundamentals, than trying to hit the jackpot on some of those crypto currencies.

That does not take away that i completely agree with triphop. New and existing EU located CFD brokers are already changing their approach. For example, i had to fill in several questionnaires/background check before i was able to apply to my current broker. Also, more and more brokers are implementing safety measures, such as negative balance protection. Lessons are learned from black swans, such as SNB's. There are plenty of alternatives to protect forex retail, and again, mifid II does a great job in doing that. Decreasing leverage 5 to 1 is totally exaggerated and should only be a very last resort in case other regulations within mifid II does not seem to work out.
Good Job on distributing this!
where did you read that leverage will be decreased? can you point a link? and if this is all true when is it gonna happen? thanks.
Thank you for creating the thread. I have already filled out the questionnaire and submitted.

I hope all European retail traders take this seriously and express their opinion by answering the questions.

Wouldnt be bad if FF could somehow pin this thread as it should concern them indirectly.
Your salary is the bribe they give you to forget your dreams
If you have a live account in UK you would have already been contacted and asked to apply for pro status
Quoting diceman555
If you have a live account in UK you would have already been contacted and asked to apply for pro status

Not all UK SB / CFD providers are yet being openly active on this. I know IG have emailed clients and asked what they will do if the proposals are ratified. LCG have not contacted their clients yet and will not tell me what their plans are.

I will fill in the ESMA consultation but I suppose if this goes through it will make my SB trading unviable and I will need to open a DMA account with a broker. What do people have as their Plan B?
i do wonder who dreams these things up .. putting a lid on leverage would surely make the market smaller for retail, the question is why do this? does somebody truly believe that this would make "trading" safer somehow? several brokers offer loss protection nowadays, why then would this change be needed?

i don't see how this could be beneficial. if this goes through at 30:1 then i guess .. well then nobody cares about retail. although not news, but not much i can do about it though.
Quoting evilmeatball
i do wonder who dreams these things up .. putting a lid on leverage would surely make the market smaller for retail, the question is why do this? does somebody truly believe that this would make "trading" safer somehow? several brokers offer loss protection nowadays, why then would this change be needed? i don't see how this could be beneficial. if this goes through at 30:1 then i guess .. well then nobody cares about retail. although not news, but not much i can do about it though.
Leverage of 30:1 is certainly safer and many managed funds don't leverage their positions. Hence lesser pressure to perform. But retailers - 100:1 sometimes 400:1 leverage! That's what makes the difference.

This minor study suggests 82% of funds are profitable (based on 2011 figures).

https://www.dukascopy.com/fxcomm/fx-...90&language=en

Also, when this article says "Europe", does it mean all of the continent of Europe or that Maoist-Marxist-Leninist-Communist-Collectivist abomination with its unelected commissars, known as the EU?

If so, then that won't last long and I'm not sure what will happen to the EUR/XXX pairs when members of the EZ, especially large ones like Italy, drop off.
Responded. Leverage limits are okay but within reason. 20:1 seems a bit low for non-major pairs.
  • Post #17
  • Quote
  • Edited 2:41am Jan 20, 2018 2:18am | Edited 2:41am
This is all for the better.
It's about time that forex loses it's casino appeal.

(not to mention Binary Options and "cryptos" they should be banned ... like ... yesterday)

Bad news for brokers-and-scammers..

. The following main features of CFDs and the way in which they have been distributed, marketed or sold across the EU have required increased attention by supervisors:

- Retail investors are exposed to a significant risk of loss (both from trading and from transaction fees), which is magnified by the effect of high leverage.
- The complexity of these products and a lack of transparent information at point of sale, which limits the ability of retail investors to understand the risks underlying these products.
- The use of aggressive marketing techniques, including the offer of incentives to clients to encourage trading in these products.
Thanks for sharing. Do we need to bother much about leverage. You can move to Australian brokers- Global Prime, IC Markets, Pepperstone.
Make all possible mistakes in Demo and rain in pips in live account
Quoting Mingary
This is all for the better. It's about time that forex loses it's casino appeal. (not to mention Binary Options and "cryptos" they should be banned ... like ... yesterday) Bad news for brokers-and-scammers.. . The following main features of CFDs and the way in which they have been distributed, marketed or sold across the EU have required increased attention by supervisors: - Retail investors are exposed to a significant risk of loss (both from trading and from transaction fees), which is magnified by the effect of high leverage. - The complexity...

ESMA may be right, may be wrong. Lower leverage might be a good thing or might drive clients to switch to even more risky approaches.

In any case, I've been using SB since 2003. I'm not at all disadvantaged by aggressive marketing techniques and poor information flow to new clients. Reduced leverage rates would mean I had to accept a lower rate of return from my money deposited. Why should I be negatively affected in this way?

Surely I have the right to accept a level of risk with which I am fully conversant.
1/30 looks like what they are aiming for. If you trade dayly bars it should be no big issue.I became profitable, only after switching to daylys.It gives you the time to study every trade properly before you jump in.

This part of it is very, very good though:

"ESMA’s other key proposals – negative balance protection on a per-account basis" !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
"The aim is that, consistently across providers, clients are routinely protected from losing more than what they have invested."

Few traders are aware of mega black swans, where brokers won´t "honour" any stop losses, simply because there´s no one on the other side of the trade.That applies for all brokers, including "non bucket shops". (OANDA did honour the stops, to their own disadvantage, after that they changed their business conditions!).You better read the fine printing on your broker´s agreement.

Remember the eurchf whopping 1500 pip drop in a few minutes? Stop losses where, in most cases, only activated at the worst price. Many daytraders, with high leverage were forced to sell their cars, and houses, and underwear.
You can google the fact. People are still fighting in court. You might be a successfull trader for years, and loose everything, I mean everything in half an hour.
I´m not against daytrading, or high leverage, on the contrary....but people better understand all the risks involved.
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