Potential mass exodus from Spreadbetters.

Sonicscooter

Experienced member
1,811 350
Just had a lengthy conversation with a very knowledgeable gentleman at IG , in a nutshell and getting to the point, the regulators feel there are two groups of trader, the "professionals" who have liquid assets (not property), ie shares, cash bonds etc minimum of £442,000, and then there are the rest, us included, no kudos for learning the trade or having spent decades buying and selling shares, just one of the masses, and this isn't IG or other companies, this is the FCA's opinion.

So from my take on things as IG make most of their money from a very small number of high worth individuals, not us, £2 a point on the DAX doesn't cut it i'm afraid, they won't be hit that hard if we don't trade any longer, this is going to go one of three ways, 1 to trade CFD's and spread bet you will need to have £442,000 in liquid assets, or 2, margins will go up vastly and markets traded will reduce especially for new accounts, 3, we are all extinct.

Regards Shane.
 

jm1054

Junior member
42 12
So from my take on things as IG make most of their money from a very small number of high worth individuals, not us, £2 a point on the DAX doesn't cut it i'm afraid, they won't be hit that hard if we don't trade any longer, this is going to go one of three ways, 1 to trade CFD's and spread bet you will need to have £442,000 in liquid assets, or 2, margins will go up vastly and markets traded will reduce especially for new accounts, 3, we are all extinct.

Regards Shane.
Oh dear, that doesn't sound too good!

Thanks for the info (y)
 

tomorton

Legendary member
7,250 969
Just pulling some official links together which might be useful -

ESMA issues updated statement on preparatory work in relation to CFDs, binary options and other speculative products offered to retail clients: 15 December 2017
https://www.esma.europa.eu/press-news/esma-news/esma-issues-updated-statement-preparatory-work-in-relation-cfds-binary-options

FCA statement on ESMA’s ongoing work on possible product intervention measures applicable to retail CFD and binary option products: 15/12/2017
https://www.fca.org.uk/news/statements/fca-statement-esma-ongoing-work-possible-product-intervention-retail-cfd-binary-options

ESMA call for evidence – potential product intervention measures on contracts for differences and binary options to retail clients: 18 January 2018
https://www.esma.europa.eu/press-news/consultations/call-evidence-–-potential-product-intervention-measures-contracts

ESMA press release re call for evidence:
Potential product intervention measures on contracts for differences and binary options to retail clients: 18 January 2018
https://www.esma.europa.eu/sites/default/files/library/esma35-43-904_call_for_evidence_-_potential_product_intervention_measures_on_cfds_and_bos_to_retail_clients.pdf

ESMA press release:
ESMA consults on potential CFD and binary options measures to protect retail Investors: 18 January 2018
https://www.esma.europa.eu/sites/default/files/library/esma71-99-930_pi_call_for_evidence_january_2018.pdf

FCA letter to CEOs expressing concern at industry failings and pointing to ESMA consultation: 10 January 2018
https://www.fca.org.uk/publication/correspondence/dear-ceo-letter-cfd-review-findings.pdf

The specific questions asked by ESMA in their call for evidence are as follows: obviously, some of these are intended for the product provider companies only –

Questions
A: Do you think that ESMA has adequately identified the instruments in the scope of its possible measures (paragraphs 3 and 5 above)?

B: What impact do you consider that the introduction of leverage limits on the basis described above (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

C: What impact do you consider that the introduction of a margin close-out rule on a per-position basis (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

D: What impact do you consider that the introduction of negative balance protection on a per-account basis (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

E: What impact do you consider that a restriction on incentivisation of trading (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

F: What impact do you consider that a standardised risk warning (applying to retail clients only) would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

G: Please provide evidence on the proportion of retail clients that use these products for hedging purposes and how the suggested measures will affect them.

H: What impact do you consider that a prohibition on providing binary options to retail clients would have on your business? Please describe and explain any one-off or ongoing costs or benefits.

I: What impact do you consider that the envisaged measures would have on retail investors?

J. Do you believe that specific restrictions concerning CFDs in cryptocurrencies should be introduced? In particular, what impact do you consider that assigning a leverage limit of 5:1 to such CFDs would have on firms’ business and / or any expected additional benefits for retail clients? How would such an impact compare to that from the possible alternatives of lower leverage limits such as 2:1 or 1:1, or a prohibition on the sale, marketing and distribution of such CFDs? Please describe and explain any one-off or ongoing costs or benefits.

Closing date 05/02.
 

tomorton

Legendary member
7,250 969
........this is going to go one of three ways, 1 to trade CFD's and spread bet you will need to have £442,000 in liquid assets, or 2, margins will go up vastly and markets traded will reduce especially for new accounts, 3, we are all extinct.

Regards Shane.

Hi Shane -

This initiative is all about derivatives so isn't there a 4th option, move to DMA? Or is that not viable?

Tom
 

Sonicscooter

Experienced member
1,811 350
Hi Shane -

This initiative is all about derivatives so isn't there a 4th option, move to DMA? Or is that not viable?

Tom

Suppose so, not something i've looked at, at any length, was always happy with where i was, have you looked at ETF's as IG cover those.
 

tomorton

Legendary member
7,250 969
Suppose so, not something i've looked at, at any length, was always happy with where i was, have you looked at ETF's as IG cover those.

Well I'd been hoping for a time now that I would be turning over such an amount of SB trades that it would become financially worthwhile to shift to DMA. Just that I hadn't planned to do it yet and have never even approached a DMA broker for T&C etc.

I don't think a 6-figure deposit is required - anyone know more about this?
 

kalott

Established member
677 57
Looking at the glass half full (not whiskey)

a negative balance protection would be the only positive thing about this changes
you cant get that with real futures
 
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Jason101

Experienced member
1,366 214
Have Your Say Now Before it's to late!!!

If you are reading this thread and want your say in the consultation then do this...

1. Answer the ESMA's call for evidence on their Responce Form found on this page.

https://www.esma.europa.eu/press-news/consultations/call-evidence-–-potential-product-intervention-measures-contracts#registration-form_consultation

2. On the drop down tab enter "Individuals"

3. Under ‘Institution’ type ‘N/A’

4. Attach (upload) a brief or detailed complaint about the proposed margin changes. Using Microsoft Word or Excel.
(or any over pdf txt doc docx xls xlsx ppt pptx pps ppsx odt ods od format)

That's it your done. Have your say in under 5 mins.
You have until the end of the day Paris time on Sunday 4th February.
 
Last edited:

jm1054

Junior member
42 12
From the Telegraph today:

'EU crackdown on 'crazy' amateur trading has gone too far, IG Group warns'

http://www.telegraph.co.uk/business/2018/01/23/eu-crackdown-crazy-amateur-trading-has-gone-far-ig-group-warns/
Thanks for sharing. Unfortunately, we're not going to get much sympathy from the "enraged wealthy client base", or readers of the article.

Off-topic, but trust the Telegraph to blame the EU. Brexiteers will lap that up! :LOL: I understood that the FCA would have already made the changes if it wasn't for the ESMA, but happy to be corrected...
 

Dowser

Experienced member
1,253 283
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...
 

wallstreetking

Well-known member
469 5
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.
 

sminicooper

Experienced member
1,148 326
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?
 

kalott

Established member
677 57
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?