I've just received this email from IG.......
Margin rates could increase to 5% on major indices and 20% on equities
Dear Mr. Brads
The European Securities and Markets Authority (ESMA) is considering some proposals which are highly likely to affect your trading. You have until 5 February to respond to ESMA, and we would strongly encourage you to do so. ESMA does listen to the views of traders and will shape its final decision according to the feedback it receives.
What are the proposals?
ESMA has come out with a number of proposals – aimed at retail clients only – to try to increase conduct standards across the industry. We largely support these changes, but feel the leverage restrictions are disproportionate and too restrictive. ESMA’s leverage proposals include:
● 30:1 leverage on major currency pairs = 3.33% margin
● 20:1 leverage on major indices = 5% margin
● 10:1 leverage on commodities (excluding gold) = 10% margin
● 5:1 leverage on equities = 20% margin
These restrictions would apply to both spread betting and CFD trading. You can read all the proposals in full here.
How will the proposals affect your trading?
As you can see from the table, these proposals would severely increase the margin required to deal:
Spread betting:
Market – £10/point.....current margin.....ESMA proposed margin
EUR/USD..................£611.................£4073
Germany 30...............£660................£6600
Oil – Brent Crude........£1035................£6900
Apple......................£8950................£32,800
CFD:
Market.........Size................Current margin............ESMA proposed margin
EUR/USD......1 standard lot....$611.........................$4073
Germany 30...1 standard lot....€1,650......................€16,500
Oil – Brt Cde..1 standard lot.....$1,035......................$6900
Apple..........1000 shares........$8,950......................$35,800
How to respond to these proposals
It’s very important that traders share their views on these proposals. As such, ESMA has posed the following question for retail investors to answer:
What impact do you consider that the envisaged measures would have on retail investors?
We’d encourage you to share your views in full. There are two ways to do so:
1. Reply to this email with your answer to the question. Clicking the link below will open a readymade response template. We will then submit all your feedback directly to ESMA on your behalf.
2. Send your thoughts directly to ESMA. We have provided a simple form on our website, ready for you to answer the question.
Once complete, please save your form and then submit it directly to the response page on ESMA’s website. You’ll see there are a few details to complete with your submission:
● Under ‘Activity’, please select ‘Individuals’ from the bottom of the dropdown
● Under ‘Institution’, please write ‘N/A’
Once you’ve filled in the remaining details, you can attach your response and submit.
Please note your contribution may be published once the consultation closes, unless you select otherwise in your response.
More information
It’s important to remember that your account will not be affected unless, and until, ESMA’s proposals become rules. We will let you know well in advance of any changes to your account.
If you’d like to speak to someone about this in more detail, our highly trained client support team will be happy to assist you on 0800 409 6789 or at
[email protected]. They’re available 24 hours a day from 8am Saturday to 10pm Friday.
Thank you in advance for sharing your views. With your help, we can ensure the industry is fair to all.
Kind regards
Peter Hetherington
CEO