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#472088 - 04/05/18 20:52 ESMA derivatives restrictions
brax Offline
Junior Member

Registered: 08/02/17
Posts: 79
Loc: Spain
Surely this will affect a lot of retail investors and their trading strategies.

https://www.esma.europa.eu/press-news/es...etail-investors

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#472090 - 04/06/18 04:56 Re: ESMA derivatives restrictions [Re: brax]
firecrest Offline
Junior Member

Registered: 12/06/16
Posts: 64
Leverage are set to be reduced.
30:1 for major currency pairs;

20:1 for non-major currency pairs, gold and major indices;

10:1 for commodities other than gold and non-major equity indices;

5:1 for individual equities and other reference values;

2:1 for cryptocurrencies;

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#472093 - 04/06/18 17:43 Re: ESMA derivatives restrictions [Re: firecrest]
Sphin Offline
User

Registered: 12/11/13
Posts: 567
Loc: Fuerth, DE
More business for less regulated brokers ...

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#472094 - 04/06/18 17:48 Re: ESMA derivatives restrictions [Re: Sphin]
AndrewAMD Offline
Senior Member

Registered: 02/21/17
Posts: 480
Loc: Chicago
And for the futures market.

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#472095 - 04/06/18 21:14 Re: ESMA derivatives restrictions [Re: AndrewAMD]
brax Offline
Junior Member

Registered: 08/02/17
Posts: 79
Loc: Spain
It seems you can keep current margin requirements if you are eligible as a professional client. This is the procedure taken from here:

https://www.handbook.fca.org.uk/handbook/COBS/3.pdf

Elective professional clients ......................................................................................................

A firm may treat a client other than a local public authority or municipality
as an elective professional client if it complies with (1) and (3) and, where
applicable, (2):

(1) the firm undertakes an adequate assessment of the expertise,
experience and knowledge of the client that gives reasonable
assurance, in light of the nature of the transactions or services
envisaged, that the client is capable of making his own investment
decisions and understanding the risks involved (the "qualitative
test");

(2) in relation to MiFID or equivalent third country business in the course
of that assessment, at least two of the following criteria are satisfied:
(a) the client has carried out transactions, in significant size, on the
relevant market at an average frequency of 10 per quarter over
the previous four quarters;
(b) the size of the client's financial instrument portfolio, defined as
including cash deposits and financial instruments, exceeds EUR
500,000;
(c) the client works or has worked in the financial sector for at least
one year in a professional position, which requires knowledge of
the transactions or services envisaged;
(the "quantitative test"); and

(3) the following procedure is followed:
(a) the client must state in writing to the firm that it wishes to be
treated as a professional client either generally or in respect of a
particular service or transaction or type of transaction or product;
(b) the firm must give the client a clear written warning of the
protections and investor compensation rights the client may lose;
and
(c) the client must state in writing, in a separate document from the
contract, that it is aware of the consequences of losing such
protections.


Edited by brax (04/06/18 21:15)

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#472096 - 04/06/18 21:25 Re: ESMA derivatives restrictions [Re: brax]
brax Offline
Junior Member

Registered: 08/02/17
Posts: 79
Loc: Spain
I think whether you are a professional client or a prudent retail investor, you shouldn't have too many problems as you wouldn't leverage too much in your positions.

But it's true this could limit some diversification in retail portfolios because of margin increases.

Futures are not an option for most people as the leverage can be sometimes excessive for one contract, so you better keep on forex and indexes only or try to use options or anything else.

Again, i think if you are a prudent retail investor you shouldn't notice too many changes.

We'll see.

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#472183 - 04/14/18 23:27 Re: ESMA derivatives restrictions [Re: brax]
easyX Offline
Newbie

Registered: 11/29/17
Posts: 39
Loc: Germany
Someone knows if the restrictions is for brokers based in the EU or for EU clients? I am afraid it's the 2nd.

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#472185 - 04/15/18 01:42 Re: ESMA derivatives restrictions [Re: easyX]
brax Offline
Junior Member

Registered: 08/02/17
Posts: 79
Loc: Spain
Originally Posted By: easyX
Someone knows if the restrictions is for brokers based in the EU or for EU clients? I am afraid it's the 2nd.


Based on what i've read, it seems to be for EU clients.

If you are eligible as a profesional client, you'll keep current margins.

The norm is still being discussed and some brokers have sent their proposals, so we'll see what happens.

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#472200 - 04/16/18 03:20 Re: ESMA derivatives restrictions [Re: brax]
easyX Offline
Newbie

Registered: 11/29/17
Posts: 39
Loc: Germany
Originally Posted By: brax


The norm is still being discussed and some brokers have sent their proposals, so we'll see what happens.



No it's already said how it will be for sure, the only thing they changed was the automatic stop out per position.
Everything else will come as proposed, they just have to translate the paperwork, whenever they put it online it will be in force 1 month later for binary ban, and 2 month later for all cfd/forex restrictions.

Sadly i can't apply tor a professional status, i dont have 500k and i am not part of any financial business, i am just a self tought private trader who likes to have some spare leverage. I dont need 100+ but 30 is not enough frown


Edited by easyX (04/16/18 03:26)

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#472208 - 04/16/18 14:42 Re: ESMA derivatives restrictions [Re: easyX]
brax Offline
Junior Member

Registered: 08/02/17
Posts: 79
Loc: Spain
Originally Posted By: easyX

Sadly i can't apply tor a professional status, i dont have 500k and i am not part of any financial business, i am just a self tought private trader who likes to have some spare leverage. I dont need 100+ but 30 is not enough frown


My situation is similar to yours, if we had more money we'd trade futures for sure.

Anyway, i think you don't really need to have 500K, as this amount is composed of cash and financial instruments. I assume your positions will be leveraged, so maybe you are actually trading a 500K portfolio...

I know of people who are receiving notes from their brokers to change to prefessional status and it seems to be that way (not 100% sure).

We'll see what happens and the upcoming consequences.

Bye.

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