ESMA Decision regarding Retail CFDs/Financial Spread Betting/

person signing document

Dear Client,

The European Securities and Markets Authority (ESMA) published on 1 June 2018 in the Official Journal of the EU its Decision Notices (EU) 2018/796 regarding imposing certain restrictions on the marketing, distribution or sale of CFDs (including Forex and Financial Spread Bets) to Retail Clients.

ESMA has in this instance acted in line with its product intervention powers referred to in Art. 40 of the Markets in Financial Instruments Regulation (MiFIR).

The CFD product intervention measures ESMA has agreed, include:

  • Maximum leverage limits ranging between 30:1 and 2:1 on new positions opened by retail clients:
    • 30:1 Major currency pairs;
    • 20:1 Non-major currency pairs, gold and major indices;
    • 10:1 Commodities other than gold and non-major equity indices;
    • 5:1 Individual equities and other reference values;
    • 2:1 Cryptocurrencies.
  • a standardised 50% margin close out rule on a per account basis;
  • negative balance protection on a per account basis;
  • a prohibition on firms offering monetary and non-monetary benefits (excluding research and information tools) to retail investors; and
  • a standardised risk warning, including firm-specific figures on the percentage of client accounts that have lost money trading CFDs.

Full details of ESMA’s decision are available here: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2018_136_R_0006&from=EN

These measures, as outlined above, will take effect on 1 August 2018 and we will be writing to you in good time before that date with more information about the specific changes we will have to make to our services and the trading platform.

Please do not hesitate to contact us with any questions you might have.

Best regards,

DF Markets Team