Forex Leverage Drops in Europe

The expected announcement for months has finally been made, and the European Regulatory Authority (ESMA), the industry regulator, has announced significant changes.

The new rules that will affect all retail customers as of 1 August 2018 will be as follows:

• US $, Euro, Japanese Yen, Pound sterling, Canadian Dollar and Swiss Franc: a maximum leverage of 30: 1 for the major currency pairs consisting of two sub-currencies.

• For all non-major parity pairs, all currencies continued in the 20: 1 maximum leverage (USD, Euro, Japanese Yen, Pound sterling, Canadian dollar or Swiss Franc).

• Major share indexes such as FTSE100, CAC40, DAX30, Dow30, S & P500, NASDAQ100, Nikkei 225, ASX200 and EUROSTOXX50 and a maximum leverage of 20: 1 for Gold.

• Maximum leverage of 10: 1 for all minor stock indexes and other non-Gold Commodities;

• 5: 1 maximum leverage for individual stocks and other reference values;

• 2: 1 maximum leverage for crypto money;

• The automatic margin is a requirement to close for positions set to 50% of the account value.

• Minus residual protection.

• Restricting the incentives offered to customers.

• Standard risk warning.

(Source: Forexbrokerim.com)

Since these changes are for retail traders, if you want to be exempted, you can choose to classify them as a Professional transaction, provided you meet certain criteria in the near future. However, please note that being classified as professional means that you will lose some protections now covering retail transactions.

With the new ESMA regulations and the new regulation on forex markets in European countries, the fact that the leverage is significantly reduced leads the small investors to open accounts in the brokers of countries outside the scope of regulation. Transfers to ASIC regulated Australian brokers investors who do not want to be affected by low leverage, especially from the UK FCA licensed brokerage houses, continue at a rapid pace.

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