ESMA & Trading Outside of the EU

metronomist

Newbie
8 0
Does anyone know of any CFD/SB firms outside of the EU that will allow you to open an account as a UK resident to avoid the new ESMA margin rates that come into force at the ens of the month?
 

SUNSEEKER

Established member
872 12
Hi Metronomist,

I am writing an article on this on my website, and I happened to be researching what people were thinking about this.

This is a long and complicated topic, so I will give you the condensed version of what I am thinking:

Months ago, when the ESMA ruling was made public, I contacted 4 major brokers, that are represented in Australia to enquire about opening an account out there.

Before I go on, I need to explain why I selected Australia. I researched every major and minor legal jurisdiction on the planet to uncover where my funds would be safe. I investigated Russia and the East, as well as tax havens such as Belize and Cayman Islands. For example, there is a broker on the Cayman Islands called TradeView, which is good, but here is the problem:

There are no bank deposit schemes for any of these off-shore havens. Russia didn't have it either, BUT Australian savers are guaranteed on their bank deposits up to $250,000. Additionally, sending money to say WestPac in Australia seems like a much more attractive proposition than say sending money to Bank of Belarus or Bank of Mauritius.

The 4 biggest banks in Australia are all in the top 50 of global banks, measured by assets.So as I was saying, I contacted brokers in Australia to ask if I could open an account. I contacted CMC, IG Markets , Plus500 and Pepperstone.

None of them could open an account for me because they are all ALSO ruled by the FCA. Because these brokers also have representation in London, they HAVE TO TREAT YOU as resident in EU, and such they can not offer you the margins you are used to. They have to abide in the rules set out by ESMA and FCA.

So I had to find a broker that was of high quality, but that did not have representation in Europe, but still catered for what I like to trade, which is Dow, FTSE, DAX etc etc.

I found a number of them, but most of them are only offering MT4, and I am simply not a fan of MT4. I could go on and on about why I am not a fan, but I will give just a few reasons: I am an old-fashioned point-and-click trader, and I love fixed spreads where the broker adds their own liquidity.

I found one that I have used for 3 months: TD365. They offer what I need: fixed spreads, stock indices spreads at 1 point, and they have a nice little introduction bonus where you get 25% off the first month. The platform is not the best I have seen, but it is certainly not the worst either.

I am still writing the article, but I will post the link here later this weekend or next week.
 
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tomorton

Legendary member
7,288 974
Great bit of research work, and I hope it all goes well. But I'm always going to be nervous about sending money out of the UK.
 

metronomist

Newbie
8 0
Yes, I too feel a little cagey about sending money out of the UK. Also, How easy is it going to be to transfer any profits from the Aussie SB firm to a UK Bank Account?
 

swissy

Senior member
2,042 200
Couple of things to be aware off;
CFD Tax implications - in the unlikely event of making a decent profit, you may be liable for tax. If you do not provide your tax details, TD365 may apply a withholding tax. (Note: You may also be able to offset losses against your tax liability as well).
Account funded in AU$ - beware of currency conversion spread and charges both ways when transferring money.
Interesting to note that the TD365 as an Australian set up is wholly owned by FINSA which is a UK PLC and I think it owns SB and CFD shops in the UK though completely different companies to TD365.
Good luck.
 

metronomist

Newbie
8 0
It does seem to complicate matters using a non EU provider. Not something I would be entirely comfortable with.
Am I correct in understanding that, as from next week it will mean you're going to have a lot more funds in your account to open new positions. Not only are you going to need 10 times more margin to trade the FSTE100 but if you offset a long position with a short then you'll have to fully fund both legs. The current margin requirement for the FTSE100 is 0.5% (with IG ) therefore about £38 for a £1 per point trade, increasing to 5% or £380.00 for a £1 per point trade.
There is also a 50% close out rule that I don't entirely understand. I guess I will have to wait until next week to see how my account will be affected. The only way out if these new margin rules is to become a professional trader by which you will need 500,000 in investment to be even considered.
 

Dowser

Experienced member
1,292 293
Hi Metro,

I received this email today from my broker (IG ) It seems they are willing and able to allow their clients to relocate their accounts to different juristictions enabling them to use much higher margin rates.

Dear Mr. Brads

We have been receiving lots of questions from clients about the other locations in which we operate, so we have put together some information which you may find useful.

We operate 16 offices across the globe and are regulated in all of them, from the Financial Conduct Authority (FCA) in the UK to the Australian Securities and Investments Commission (ASIC) in Australia and many places in between.

All of our global offerings are compliant with the relevant local regulation and therefore our products may vary slightly by office, as may access to certain other features. For instance, Australia does not have a compensation scheme equivalent to the Financial Services Compensation Scheme (FSCS) in the UK, but does operate an equivalent Financial Ombudsmen Service (FOS) to handle customer complaints.

Across all of our offices, we always strive to treat our customers fairly and focus on delivering the best possible customer outcomes. We also strictly apply client money rules in all of our global offices, meaning that your client money is segregated and protected to the highest possible standard. Whichever global offering you choose, you’ll receive the same market-leading technology and unrivalled support that you expect from IG.

How to apply
If you decide you’d like to open an additional account with another IG office, you’ll need to complete a new application form. This is because your new account will be entirely separate from your UK account, with a new username and password.

From the global comparison page, please click on the location you are interested in for more details.
We're here to help
If you have any questions about this or need assistance with your account, our highly trained client services team is available by phone or email 24 hours a day from 8am Saturday to 10pm Friday.

Kind regards

IG


Here is a link with tons of info on the subject:

https://www.ig.com/uk/compare-our-leveraged-trading?CHID=3&QPID=22380&tid=1852f6c46be336ebdac6fce764208e20
 

FXX

Experienced member
1,140 195
I wonder if that's a loophole the fsa will close in the future based on residence.

Sent from my SM-G950F using Tapatalk
 

Dowser

Experienced member
1,292 293
I wonder if that's a loophole the fsa will close in the future based on residence.

Sent from my SM-G950F using Tapatalk
I don't think the Foods Standards Agency has much say in the matter!
 
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FXX

Experienced member
1,140 195
I don't think the Foods Standards Agency has much say in the matter!
Well they could introduce policy that requires UK residents to have their leverage policy applied. This reminds me of tax avoidance schemes and the subsequent changing of the rules by the government to close them once they realised.

Sent from my SM-G950F using Tapatalk
 

metronomist

Newbie
8 0
Great article Sunseeker. Cbrads, I received the same email from IG too. I've sent an email to IG to ask about opening a non-EU account with them as a UK resident. I'll let you know how I get along.
 

metronomist

Newbie
8 0
OK. I've received a reply from IG which reads,
"Our product and account offering does vary depending on which entity you chose to contract with. The easiest way to compare our different offerings is to use the link in the previous email which provides an overview of IG Group. You can then decide which offering will best meet your requirements."
Doesn't quite answer my question, but as I read it you can open an account with an IG office in another country. This will be a new application for an account and is in no way linked to your existing UK one. Looking at the link they sent (posted above by cbrads), it appears that they do offer 200:1 leverage on Indices CFD's in New Zealand, Australia & Switzerland.
 

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