New ESMA Rules comming 1. August 2018

New ESMA leverage restrictions for CFD trading

The European Securities and Markets Authority (ESMA) recently announced new measures for trading CFD products for retail customers. These measures include leverage restrictions (detailed below), negative balance protection and Margin Closeout restrictions, all of which are being introduced in order to protect retail clients. The new restrictions will come into effect on August 1st, 2018.

What are the new ESMA restrictions?

According to the new ESMA intervention measures, leverage rates can only be offered between a margin of 2:1 and 30:1, depending on the specific instrument. Margin Closeout will be set at 50%, meaning that the Stop Loss setting on eToro will be limited to a maximum of 50% per trade.

As a regulated trading platform, eToro will be compliant with the new regulations.

The new leverage limitations are as follows:

  • 30:1 for major currency pairs (such as EUR/USD)
  • 20:1 for non-major currency pairs (such as NZD/USD), gold and major indices
  • 10:1 for commodities with the exception of gold and non-major equity indices
  • 5:1 for CFD stocks
  • 2:1 for cryptocurrency CFD

How will this affect you as an eToro client?

First of all, it is important to note that the above changes will not affect open positions. In addition, while the restrictions apply to all retail clients, they will not apply to those who choose to apply and be approved as Elective Professional Clients on eToro. However, please be aware that Elective Professional Clients are not eligible for certain other regulatory protection. Although not required, eToro will provide these clients with all the protection available to eToro retail customers.

Elective Professional Clients need to meet certain criteria, such as trading volume, transaction frequency and/or professional experience. To apply for Elective Professional Client Status, please fill out this form. If your application meets the criteria, an account manager will contact you.

Please note: The approval process for Elective Professional Clients could take some time. Therefore, if you wish to apply, please fill out the above form promptly, to ensure that your request is approved, (providing you meet the criteria), before the changes come into effect.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results.

Cryptoassets are volatile instruments which can fluctuate widely in a very short timeframe and therefore are not appropriate for all investors. Other than via CFDs, trading cryptoassets is unregulated and therefore is not supervised by any EU regulatory framework.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.

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