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Wednesday 25 July 2018

New ESMA regulations for forex traders

The European Securities and Markets Authority (ESMA) has published a new regulations for forex brokers, CFDs and binary options providers. The document was adjusted to add a section explaining the position of the mega-regulator in the issue of certification and provision of cross-border financial services to retail customers.
In relation to trading CFD contracts in Europe, the Authority changes the leverage in the range from 1:30 to 1:5, depending on the volatility of the underlying asset (the so-called historical price behavior). Also, the document sets standards for forced close out of the position (margin close out). That is, the stop out - level (in percent), when the provider is forced to close the client's position, will be the same for all traders with this asset.
Moreover, new measures of protection against negative balance are introduced. According to the regulator, this will provide a more guaranteed limit of possible losses to retail customers.
In addition, the European regulator is making crypto-currency instruments (CFD contracts) within the limits of these restrictions. Also, the ESMA regulator completely prohibits the trade in binary options in Europe.
My favorite broker ActivTrades provides its retail clients with options to mitigate these restrictions by opening a Professional Trading Account, or to open an account in ActivTrades' new Bahamas office.


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