Potential mass exodus from Spreadbetters.

Lepope

New member
Jan 15, 2018
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#1
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.
 

cbrads

Well-known member
Mar 11, 2014
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#3
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?
 

tomorton

Well-known member
Feb 28, 2002
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#5
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-ne...paratory-work-in-relation-cfds-binary-options

https://www.fca.org.uk/news/stateme...roduct-intervention-retail-cfd-binary-options

https://uk.investing.com/news/stock...ncern-over-spreadbetting-retail-market-968319


No mention of spreadbetting specifically from the FCA but ESMA talk about "other speculative products".
 

kalott

Active member
Jul 10, 2004
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#6
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)
 
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new_trader

Well-known member
Jan 1, 2006
6,166
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#7
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.
 

Lepope

New member
Jan 15, 2018
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#9
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.
 

new_trader

Well-known member
Jan 1, 2006
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#10
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.
 

tomorton

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Feb 28, 2002
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#11
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.
 

cbrads

Well-known member
Mar 11, 2014
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#12
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...
 

tomorton

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Feb 28, 2002
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#13
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.