Escaping the ESMA ruling

[SUNSEEKER]

Can I open a dialogue about the margin issue? I feel as if I have completely misunderstood the ESMA rules and I realize now how detrimental this could be for the industry brokers.

I placed a trade yesterday on an account that I have not had converted to PRO status yet. I shorted the Dow - double top - and found myself looking at the margin requirements.

I had shorted it in £10 a point. Yes, I know. BIG SIZE, but it was all this account could now afford. My stop loss was 30 points away. So my risk should be £300. BUT my margin requirement was still £12,500.

So I moved my stop-loss down to break-even, thinking that at least now the margin would be lowered on my account. It wasn't. It stayed at £12,500.

I then called a friend who works and run a spread betting company in London. He told me that this was indeed the new world. Margins would not be reduced by stop-losses or EVEN guaranteed stop losses.

No matter how big your profit, you still need the same amount of funds for margin.

This was a big shock to me. I had always assumed that margins could be lowered by the use of stops or at least guaranteed stops. I was wrong.

So I ask myself how the shareprice of PLUS500 can be trading at an all time high, but maybe that is a question for another thread.

 

[jm1054]

Can I open a dialogue about the margin issue? I feel as if I have completely misunderstood the ESMA rules and I realize now how detrimental this could be for the industry brokers.

I placed a trade yesterday on an account that I have not had converted to PRO status yet. I shorted the Dow - double top - and found myself looking at the margin requirements.

I had shorted it in £10 a point. Yes, I know. BIG SIZE, but it was all this account could now afford. My stop loss was 30 points away. So my risk should be £300. BUT my margin requirement was still £12,500.

So I moved my stop-loss down to break-even, thinking that at least now the margin would be lowered on my account. It wasn't. It stayed at £12,500.

I then called a friend who works and run a spread betting company in London. He told me that this was indeed the new world. Margins would not be reduced by stop-losses or EVEN guaranteed stop losses.

No matter how big your profit, you still need the same amount of funds for margin.

This was a big shock to me. I had always assumed that margins could be lowered by the use of stops or at least guaranteed stops. I was wrong.

So I ask myself how the shareprice of PLUS500 can be trading at an all time high, but maybe that is a question for another thread.

Yes, that's pretty much it!

For traders who always define their maximum risk via stop loss orders, the whole thing is infuriating!

 

[FXX]

So I want to dish out an award to A. X. I. Trader UK for being the dumbest broker of them all. The idiots changed my leverage on all fx pairs to 2:1. I pulled them up about it and they simply directed me to the official documentation with a bull5h!T general read the documentation response. I then replied to them giving them hell for being unprofessional and that the leverage on my account didn't comply with general guidelines. In fact what they have done is apply leverage applied to cryptocurrency on all fx pairs. This seemed odd to me but makes complete sense after their latest response.

They obviously read this line and took it at face value ignoring the breakdown of what's clearly being communicated ad a range of leverage. Here is the line out of the documentation


Leverage limits on the opening of a position by a retail client from 30:1 to 2:1

Here is the full context of what is being communicated

Leverage limits on the opening of a position by a retail client from 30:1 to 2:1 , which
vary according to the volatility of the underlying:


 30:1 for major currency pairs;

 20:1 for non-major currency pairs, gold and major indices;

 10:1 for commodities other than gold and non-major equity indices;

 5:1 for individual equities and other reference values;

 2:1 for cryptocurrencies;


And here is their email to me. You can't make this 5h!t up.


"
Your account is registered under FCA and this reduction in leverage is not imposed by Ax*******, but by ESMA(European Securities and Markets Authority), whom FCA follows.*

You may have missed this*news from ESMA regarding it's newly imposed regulations on leverage for CFDs . Regardless, you may also refer to this weblink:https://www.esma.europa.eu/sites/de...8_press_release_product_intervention.pdf*from ESMA's official website, that evidently stipulates leverage limits on the opening of a position by a retail client from 30:1 to 2:1.
"

I suspect this stupidity will result in them losing so much business they will end up closing shop. I am going to reach out to their CEO and inform him or her of them being the laughing stock of the broker market.

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[tomorton]

Of course, the firm can impose tighter margin restrictions than the maximum allowed by ESMA/FCA but it only makes sense if they actively want to drive clients away. As you say.

 

[breaktwister]

What is next, bookies will be forced to check your wage slips when you want to put on a bet? Only allowed to bet 1% of your wages per week? ****ing stupid rule that you cannot reduce margin requirements by using stops. I hope that when the UK leaves the EU this stupid ESMA lose authority.

 

[FXX]

The CEO got back to me and apologised but I am not going back to them. They have also credited me £100 so I'll stick that into my fxpro account

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