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FCA imposes bonus ban and leverage cap for CFDs

  • #101
  • Dec 15, 2016 2:58am Dec 15, 2016 2:58am
Three of the leading UK forex brokers – CMC Markets, IG Group, and Gain Capital’s City Index, are forming a contract for difference (CFD) providers association as a response to the recent announcement of the UK Financial Conduct Authority (FCA) that it intends to alter the regulation of forex trading service providers. The newly-formed lobby organization could unite UK brokers in discussing and fighting the local regulator’s recently announced regulatory changed regarding the forex industry. The new rules are proposals at this point and the regulator is seeking market participants’ feedback. The newly-formed CFD association will facilitate brokers in communicating their concerns and worries.
  • #102
  • Jan 21, 2017 3:27am Jan 21, 2017 3:27am
Quoting Supertrader9
http://www.leaprate.com/fca-rules-questionnaire/ LeapRate is gathering the viewpoints of clients at leading UK online brokerages on the new rules for Forex and CFD trading proposed by the FCA. We will be presenting the individual viewpoints, as well as summary results, to the FCA prior to the March 7th, 2017 deadline for comment on their proposals. Make sure that your voice is heard!

EVERY UK trader reading this thread needs to complete the FCA form and Leaprate.com questionnaire.

Don't just ignore, get involved, I've done the form and email.

We need thousands of UK traders to make it clear to FCA...

some points:
-----------------------------------
- 85% losing rate for retail traders is actually good, it used to be 95% lose.
- traders who use little leverage have larger accounts and are more experienced
- Cfds and FX are targeted towards traders not long term investors.
- FX and stock leverage are not comparable,
i.e EURUSD FX 1 point increment is hundredth of a cent, stock increments are 1 point= 1 cent or penny
- traders can cap there own leverage, in their user settings..
- Trading is for Adults not cry babies..
-There are DEMO accounts for a reason
-Educational resources provided by Brokers are quite good, articles, videos and webinars.
Max risk 1-2% a trade is often mentioned.
-Most accounts are micro and mini, no one is losing their life savings...
-unfortunately Fx has been advertised on Football shirts, meaning more complaints to the FCA
by your average West Ham F.C supporter, who put on 2 lots on his first trade without demo trading,
lost it all on BREXIT, now apparently Fx is a scam. These complaints do not reflect the average retail
traders views...FCA hear more from the losers.
All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 17.5%
  • #103
  • Jan 21, 2017 3:27am Jan 21, 2017 3:27am
https://www.fca.org.uk/publications/...retail-clients

You can also:

 

  1. email [email protected] or
  2. write to: Wholesale Conduct Policy Team, Strategy and Competition Division, Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS

All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 17.5%
  • #104
  • Feb 9, 2017 11:37am Feb 9, 2017 11:37am
I fear the FCA may introduce some short term unintended consequences when it changes the rules.

Picture the situation: you're on a 100:1 or 200:1 leveraged account and overnight your margin requirement will double or quadruple.
  • #105
  • Feb 10, 2017 10:52am Feb 10, 2017 10:52am
Quoting gonefishin1
I fear the FCA may introduce some short term unintended consequences when it changes the rules. Picture the situation: you're on a 100:1 or 200:1 leveraged account and overnight your margin requirement will double or quadruple.
If the regulation will change, the transition period won't be overnight. They are not idiot. They will arrange a transition time for instance 45 days.
  • #106
  • Feb 10, 2017 11:50am Feb 10, 2017 11:50am
Quoting MoneyTalks58
{quote} If the regulation will change, the transition period won't be overnight. They are not idiot. They will arrange a transition time for instance 45 days.
Try asking your average uninformed punter to raise their margin by that level within 45 days.
  • #107
  • Feb 11, 2017 5:47am Feb 11, 2017 5:47am
Quoting gonefishin1
{quote} Try asking your average uninformed punter to raise their margin by that level within 45 days.
I mean regulator will force brokers to do it. For instance, in Turkey the leverage was droped by regulator dramatically however the customer which have open positions have 45 days to realize their positions.
  • #108
  • Feb 12, 2017 4:44am Feb 12, 2017 4:44am
That's exactly the point I'm making.

For example, punter A is on 200:1 leverage. New regs are introduced and suddenly that's becoming 50:1.

Punter A has 45 days to quadruple their deposit, which most won't be able to do.

So, serendipitously, the FCA will be making the spread betters richer by triggering margin calls and any positions being closed out.
  • #109
  • Feb 21, 2017 4:23am Feb 21, 2017 4:23am
After the UK, Belgium, France, Cyprus and Israel, the Netherlands is jumping on the bandwagon - they are looking to ban the advertising of CFDs, futures and warrants. The Authority for the Financial Markets (AFM), which is the Dutch financial regulatory body, emphasizes on the harm caused by instruments with leverage of 10:1 or higher.
Personally, I assume that actual ban on instruments and/or changes in regulation concerning leverage will also follow sooner or later.
  • #110
  • Feb 23, 2017 6:59am Feb 23, 2017 6:59am
Quoting FerruFx
Despite what people think about this, that's a great news for traders. High leverage and bonuses are the best commercial incentives to attract newbies .. who have no idea about the danger of high leverage. Yes they write in small "Trading involves significant risk of loss" ... but that's like giving a gun to a teenager and warning that it's dangerous to play russian roulette!
Never been a big fan of high leverage ratios myself. It is a double-edged sword, which can very easily kill your account if you don’t know what you are doing. One benefit from capping on 1:50 would be that it will keep away some people with smaller accounts, which are usually participating only for the adrenalin rush.
  • #111
  • Feb 25, 2017 5:52am Feb 25, 2017 5:52am
When it's all said and done, and they're looking at why London ceased to be the financial capital of Europe, they will end up with 2 main ones:

  1. BREXIT
  2. FCA and it's ridiculous regulation pushing traders to CySec (yes, they are also tightening, but they are leaving it up to the trader to request extra leverage, you have to send it writing. FCA will kill leverage full stop)

The Pips man cometh
  • #112
  • Mar 10, 2017 6:45am Mar 10, 2017 6:45am
FCA receives 4000 replies, including 100 page reports from brokers, decision will take longer than expected, late May earliest...

http://www.leaprate.com/forex/regula...ule-proposals/

https://www.ft.com/content/043d9b52-...b-6bb07f5c8e12
All Assets NAS100 GLD BTC AUS JPY GBP All Time Return: 17.5%
  • #113
  • Mar 10, 2017 7:19am Mar 10, 2017 7:19am
50x leverage seems fine to me.

If you can't make good cash with 50x then you're not going to be able to make it with 200x.

If you bust out with 50x then you're 1000% going to bust out with anything higher, even 51x let alone 100x+.

If you need 100x+ to make money and anything less means you won't be able to, that makes no sense at all. Leverage doesn't make or lose a client money per se, it's getting the direction wrong that does.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #114
  • Mar 10, 2017 7:23am Mar 10, 2017 7:23am
Quoting Phil_GMT
FCA receives 4000 replies, including 100 page reports from brokers, decision will take longer than expected, late May earliest... http://www.leaprate.com/forex/regula...ule-proposals/ https://www.ft.com/content/043d9b52-...b-6bb07f5c8e12
If only the majority of UK & EU traders bothered to send in feedback we'd probably get somewhere!
  • #115
  • Mar 10, 2017 2:54pm Mar 10, 2017 2:54pm
Quoting Calculus
50x leverage seems fine to me. If you can't make good cash with 50x then you're not going to be able to make it with 200x. If you bust out with 50x then you're 1000% going to bust out with anything higher, even 51x let alone 100x+. If you need 100x+ to make money and anything less means you won't be able to, that makes no sense at all. Leverage doesn't make or lose a client money per se, it's getting the direction wrong that does.
I totally agree, with 50-1 being Max leverage, but i still don't want it cut because I thik the regulators really want FX at maximum 10-1 in the long run. It has been proposed in many developed countries.
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  • #116
  • May 11, 2017 5:38am May 11, 2017 5:38am
Compared to everyone else, the new German regulator didn't crack down on CFDs as much as they could have. The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, a.k.a. BaFin) announced it's introducing certain restrictions to CFD trading in order to safeguard the interests of retail clients.
Namely, forex brokers won’t be able to offer trading in CFDs, unless they provide their clients with negative balance protection. Brokers that wish to continue to operate in Germany have three months to comply with the requirement (until August 8, 2017).
  • #117
  • May 11, 2017 6:18am May 11, 2017 6:18am
The real interesting aspect will be, how brokers not directly regulated by the German authority react based on this administrative act.

In theory NO brokers will be allowed to offer products with additional payment obligations to german clients anymore starting August 2017. In fact it is of course tricky to enforce any kind of fine to oversea brokers, but I am curious in general how each broker deals with that decision now.

Altough most of my brokers already fulfill the new requirements, there are two or three who do not yet ..
  • #118
  • Jun 25, 2017 11:26am Jun 25, 2017 11:26am
https://www.leaprate.com/forex/regul...orex-leverage/

update from 18th April 2017.


Won't know until late 2017

Quote:

"While not totally tipping its hat, that statement seems to us to indicate some flexibility in the blanket 50x leverage cap, possibly leaving the door open to a softer leverage limit such as was introduced by CySEC in Cyprus, allowing for higher trading leverage for more experienced traders."
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  • #119
  • Jun 25, 2017 11:50am Jun 25, 2017 11:50am
https://www.leaprate.com/forex/regul...age-proposals/
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  • #120
  • Jul 8, 2017 5:30am Jul 8, 2017 5:30am
I'm annoyed at the proposals, they seem to have been brought about because a large number of clueless newbies lost all their money, complained, were told by their broker "sorry that's the market, you agreed you understood that" and so went whinging to the FCA.

When I was a newbie, I took care to understand what I was getting into, exactly so I didn't unexpectedly lose large sums.

A Leverage cap means traders have to have more money on deposit with brokers. Ask clients of Alpari how that worked out for them. It also means traders with less money will be prevented from making a decent profit from a good strategy.

I hope the holy trinity of brokers who are ganging up to fight the proposals are successful.
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