Potential mass exodus from Spreadbetters.

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Old Jan 15, 2018, 7:39pm   #1
 
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Potential mass exodus from Spreadbetters.

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.
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Old Jan 15, 2018, 10:20pm   #2
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Worrying news indeed David. Might have to seek alternatives myself too.

Anybody know anything more about this?
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Old Jan 15, 2018, 10:46pm   #3
 
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30:1 sounds pretty sensible to me. You'd need a grand in your acc to trade the DOW at £1/pt, whats wrong with that? or have I misunderstood?
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Old Jan 15, 2018, 10:48pm   #4
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If you want higher leverage its probably only two things you can do?

go pro (if you pass)

http://www.trade2win.com/boards/spre...il-client.html

or find a broker in a country outside EU? (with other regulations)

of course there is a third option

borrow money to trade with..

Last edited by kalott; Jan 15, 2018 at 10:56pm.
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Old Jan 15, 2018, 10:53pm   #5
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These links are interesting but there's nothing firm yet about will definitely happen or what will definitely not happen.
https://www.esma.europa.eu/press-new...binary-options

https://www.fca.org.uk/news/statemen...binary-options

https://uk.investing.com/news/stock-...-market-968319


No mention of spreadbetting specifically from the FCA but ESMA talk about "other speculative products".
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Old Jan 15, 2018, 11:07pm   #6
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Originally Posted by cbrads View Post
30:1 sounds pretty sensible to me. You'd need a grand in your acc to trade the DOW at £1/pt, whats wrong with that? or have I misunderstood?
yes, if we get 30 on indices and major forex?

and maybe negative balance protection? (not sure about that)

Last edited by kalott; Jan 15, 2018 at 11:12pm.
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Old Jan 16, 2018, 8:16am   #7
 
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Quote:
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.
They only mention CFD's and Binary Options, nothing about Spread-betting. CFD's are generally considered to be a more "Professional" product so I can understand why they want to limit access to retail customers.
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Old Jan 16, 2018, 8:24am   #8
 
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Originally Posted by new_trader View Post
They only mention CFD's and Binary Options, nothing about Spread-betting. CFD's are generally considered to be a more "Professional" product so I can understand why they want to limit access to retail customers.
No it's everything.
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Old Jan 16, 2018, 8:30am   #9
 
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Originally Posted by cbrads View Post
30:1 sounds pretty sensible to me. You'd need a grand in your acc to trade the DOW at £1/pt, whats wrong with that? or have I misunderstood?
I don't know, they're mentioning needing 23k in your account just to do 10pp on Ftse. as opposed to £155 now. That's quite a jump in my eyes. That being said, I have my doubts as to whether they know the true figures.
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Old Jan 16, 2018, 8:43am   #10
 
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Originally Posted by Lepope View Post
No it's everything.
I have accounts with 2 different spread-betting brokers and until I get the e-mail you got, I will give myself the benefit of the doubt and say that it is only CFD's and Binary Options and any other leverged product that is considered "professional".

Retail clients are the bread and butter for Spread betting companies. If what you are saying is right they would all go out of business...£23K to trade 10pp? You are kidding!! My DMA broker in the US doesn't require margins anywhere near that size to trade real E-mini S&P500 Futures contracts @ US$50/point.
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Old Jan 16, 2018, 8:45am   #11
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Originally Posted by new_trader View Post
I have accounts with 2 different spread-betting brokers and until I get the e-mail you got, I will give myself the benefit of the doubt and say that it is only CFD's and Binary Options and any other leverged product that is considered "professional".

Retail clients are the bread and butter for Spread betting companies. If what you are saying is right they would all go out of business...£23K to trade 10pp? You are kidding!! My DMA broker in the US doesn't require margins anywhere near that size to trade real E-mini Futures contracts @ US$50/point.

I've emailed my account manager at my SB firm, will see what they can say.
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Old Jan 16, 2018, 8:55am   #12
 
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Originally Posted by Lepope View Post
I don't know, they're mentioning needing 23k in your account just to do 10pp on Ftse. as opposed to £155 now. That's quite a jump in my eyes. That being said, I have my doubts as to whether they know the true figures.
That doesn't make sense to me, with £23K in your acc, you should be able to trade FTSE at £3/pt without using any margin...
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Old Jan 16, 2018, 8:55am   #13
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LCG can only say nothing has been announced yet re any leverage changes, so they can only wait for what the FCA decide and then go with it.
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Old Jan 16, 2018, 9:11am   #14
 
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OP, who is your broker BTW?
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Old Jan 16, 2018, 12:38pm   #15
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Have emailed FCA to ask if SB will be included or excluded from leverage restrictions. They should get back to me within 2 days.
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