Potential mass exodus from Spreadbetters.

This is a discussion on Potential mass exodus from Spreadbetters. within the First Steps forums, part of the Reception category; Originally Posted by jm1054 I understood that the FCA would have already made the changes if it wasn't for the ...

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Old Jan 24, 2018, 2:16pm   #57
 
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Originally Posted by jm1054 View Post
I understood that the FCA would have already made the changes if it wasn't for the ESMA, but happy to be corrected...
I think you're right, CMC markets was considering moving operations to Germany because it believed future regulation would be less draconian there...
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Old Jan 24, 2018, 2:51pm   #58
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For those that are risking less then 2% of their trading capital on a single trade.. this new set of regulations shouldn't really matter.
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Old Jan 24, 2018, 2:53pm   #59
 
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The basic problem is that "a fool and his money are soon parted". You can impose whatever rules & regulation you like but it won't cure the problem. It will most likely inconvenience serious traders; but what's new about that - the market's always done that to us hasn't it?
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Old Jan 24, 2018, 4:37pm   #60
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Originally Posted by wallstreetking View Post
For those that are risking less then 2% of their trading capital on a single trade.. this new set of regulations shouldn't really matter.
whats maybe matters is how this will affect their profit (IG and others)?

someone will still have to pay their profit?
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Old Jan 24, 2018, 7:26pm   #61
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Latest e-mail from IG's CEO . . .

#ReplytoESMA on your new feedback site

Dear Mr. Wilcox

We recently emailed you to highlight ESMA leverage proposals which, if implemented, would see margins for retail traders increase to 3.33% on EUR/USD, 5% on the DAX, and 20% on equities.

The response we have received from our clients across Europe has been overwhelming. On receiving such feedback against these leverage proposals, we have set up a new website – replytoESMA.trading – so the scale of the dissatisfaction with Europe's regulator will be more visible.

We have received over 3000 replies so far – and counting. We are in the process of uploading them anonymously to the site (aside from opt-outs). If you have not commented on these proposals yet, please visit replytoESMA.trading by 5 February to add your views and read other traders’ replies.

Information about ESMA’s margin close-out proposal

In addition to the leverage restrictions detailed in our previous email, ESMA is suggesting a 50% margin close-out rule on a position-by-position basis. This is a drastic change to the current system where we look at positions together at 'account level', and means traders will be in danger of having positions closed out early – even if their overall strategy is in profit.

So if any single position runs a loss to half the initial margin, that position will have to be closed. For example if the initial margin to open a Germany 30 trade was €2000, that position would have to be closed by IG when there was a loss of €1000 (50% of €2000), irrespective of profits on other positions. IG feels this is not sensible.

You can read all the proposals in full here.

How will this proposal affect your trading?

While we support many of ESMA’s suggestions, we believe that the position-by-position close-out model could prove harmful to balanced trading strategies. We feel that an account-level approach is far more appropriate.

Here are two examples:

● Say you have a long Dow Jones position and a short DAX position. You’ll risk having one position closed out if losses reach 50% of your initial margin on that position, even if you are in profit on your overall strategy. This is because ESMA’s proposal disregards profits on other positions and indeed the success of your overall strategy. This could result in unnecessary extra costs, as you may need to re-establish one leg of your strategy after it is closed out.

● Imagine you have a short CFD position on the FTSE 100, to hedge a long portfolio held elsewhere. If the losses on your short FTSE 100 CFD reach 50% of your initial margin, your position would be closed. This is because ESMA suggest that even if you have enough funds in your CFD account to keep your hedging position open, your provider must close it at the 50% level. This could increase your overall risk and your end costs, as you may need to re-establish your hedge by reopening the short FTSE 100 CFD position after it’s been closed out.


Reply to ESMA now

You can respond to this proposal on the margin close-out page of your new ReplytoESMA site. We will submit all responses to ESMA on your behalf. You can also reply to the leverage proposals from here, and read trader and industry responses from across Europe.

Have your say

Please note that if you respond in this way, your comments may be published anonymously on the website.

We’d strongly encourage you to share your views on this proposal, as ESMA will shape its final decision according to the feedback it receives. The deadline for responses is 5 February.

More information

It’s important to remember that your account will not be affected unless, and until, ESMA’s proposals become rules. We will let you know well in advance of any changes to your account.

If you’d like to speak to someone about this in more detail, our highly trained client support team will be happy to assist you on 0800 409 6789 or at helpdesk.uk@ig.com. They’re available 24 hours a day from 8am Saturday to 10pm Friday.

Thank you in advance for sharing your views. With your help, we can ensure the industry is fair to all.

Kind regards

Peter Hetherington

CEO

T 0800 409 6789
E helpdesk.uk@ig.com
community.ig.com

#ReplytoESMA.trading

IG.com
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Old Jan 24, 2018, 10:40pm   #62
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Originally Posted by Lepope View Post
Got an email from my spreadbetter, telling me that margins are likely going through the roof on all instruments. This is due to ESMA's plan to restrict the leverage available to retail clients to a maximum of 30:1. In plain english, unless you have hundreds of thousands of pounds in your account, you're out the game.

Having rung around most spreadbetters today, it appears that this is across the board and having spoken to my own spreadbetting firm at length today, it appears that this is a done deal.

I trade forex and indices. Can someone recommend a broker, (or alternative vehicle to spreadbetting), to trade these markets, ie a broker who will deal with the average man in the street, not just a professional.

Thanks.

David.

Deleveraging is simply increasing resilience of you trading bets to volatility what is direct measure of risk. Decreasing potential risk is bad in your opinion?
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Old Jan 26, 2018, 11:44pm   #63
Joined Sep 2008
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Originally Posted by cbrads View Post

● 30:1 leverage on major currency pairs = 3.33% margin
● 20:1 leverage on major indices = 5% margin
● 10:1 leverage on commodities (excluding gold) = 10% margin
● 5:1 leverage on equities = 20% margin


Market – £10/point.....current margin.....ESMA proposed margin

EUR/USD..................£611.................£4073
Germany 30...............£660................£6600
Oil – Brent Crude........£1035................£6900
Apple......................£8950................£3 2,800

CFD:
Market.........Size................Current margin............ESMA proposed margin

EUR/USD......1 standard lot....$611.........................$4073
Germany 30...1 standard lot....€1,650......................€16,500
Oil – Brt Cde..1 standard lot.....$1,035......................$6900
Apple..........1000 shares........$8,950......................$35,800
You guys have it easy compared to the AWFUL margins here in the USA.

Peter
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Old Jan 27, 2018, 12:12am   #64
 
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Just out of interest, I spoke to IC markets this week.

Accept uk clients
full list of indices.
up to 500/1 leverage
No EU regulation
based and regulated in oz.

At least all is not lost if the ruling goes the wrong way.
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