timsk
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Latest e-mail from IG's CEO . . .
#ReplytoESMA on your new feedback site
Dear Mr. Wilcox
We recently emailed you to highlight ESMA leverage proposals which, if implemented, would see margins for retail traders increase to 3.33% on EUR/USD, 5% on the DAX, and 20% on equities.
The response we have received from our clients across Europe has been overwhelming. On receiving such feedback against these leverage proposals, we have set up a new website – replytoESMA.trading – so the scale of the dissatisfaction with Europe's regulator will be more visible.
We have received over 3000 replies so far – and counting. We are in the process of uploading them anonymously to the site (aside from opt-outs). If you have not commented on these proposals yet, please visit replytoESMA.trading by 5 February to add your views and read other traders’ replies.
Information about ESMA’s margin close-out proposal
In addition to the leverage restrictions detailed in our previous email, ESMA is suggesting a 50% margin close-out rule on a position-by-position basis. This is a drastic change to the current system where we look at positions together at 'account level', and means traders will be in danger of having positions closed out early – even if their overall strategy is in profit.
So if any single position runs a loss to half the initial margin, that position will have to be closed. For example if the initial margin to open a Germany 30 trade was €2000, that position would have to be closed by IG when there was a loss of €1000 (50% of €2000), irrespective of profits on other positions. IG feels this is not sensible.
You can read all the proposals in full here.
How will this proposal affect your trading?
While we support many of ESMA’s suggestions, we believe that the position-by-position close-out model could prove harmful to balanced trading strategies. We feel that an account-level approach is far more appropriate.
Here are two examples:
● Say you have a long Dow Jones position and a short DAX position. You’ll risk having one position closed out if losses reach 50% of your initial margin on that position, even if you are in profit on your overall strategy. This is because ESMA’s proposal disregards profits on other positions and indeed the success of your overall strategy. This could result in unnecessary extra costs, as you may need to re-establish one leg of your strategy after it is closed out.
● Imagine you have a short CFD position on the FTSE 100, to hedge a long portfolio held elsewhere. If the losses on your short FTSE 100 CFD reach 50% of your initial margin, your position would be closed. This is because ESMA suggest that even if you have enough funds in your CFD account to keep your hedging position open, your provider must close it at the 50% level. This could increase your overall risk and your end costs, as you may need to re-establish your hedge by reopening the short FTSE 100 CFD position after it’s been closed out.
Reply to ESMA now
You can respond to this proposal on the margin close-out page of your new ReplytoESMA site. We will submit all responses to ESMA on your behalf. You can also reply to the leverage proposals from here, and read trader and industry responses from across Europe.
Have your say
Please note that if you respond in this way, your comments may be published anonymously on the website.
We’d strongly encourage you to share your views on this proposal, as ESMA will shape its final decision according to the feedback it receives. The deadline for responses is 5 February.
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
T 0800 409 6789
E [email protected]
community.ig.com
#ReplytoESMA.trading
IG.com
#ReplytoESMA on your new feedback site
Dear Mr. Wilcox
We recently emailed you to highlight ESMA leverage proposals which, if implemented, would see margins for retail traders increase to 3.33% on EUR/USD, 5% on the DAX, and 20% on equities.
The response we have received from our clients across Europe has been overwhelming. On receiving such feedback against these leverage proposals, we have set up a new website – replytoESMA.trading – so the scale of the dissatisfaction with Europe's regulator will be more visible.
We have received over 3000 replies so far – and counting. We are in the process of uploading them anonymously to the site (aside from opt-outs). If you have not commented on these proposals yet, please visit replytoESMA.trading by 5 February to add your views and read other traders’ replies.
Information about ESMA’s margin close-out proposal
In addition to the leverage restrictions detailed in our previous email, ESMA is suggesting a 50% margin close-out rule on a position-by-position basis. This is a drastic change to the current system where we look at positions together at 'account level', and means traders will be in danger of having positions closed out early – even if their overall strategy is in profit.
So if any single position runs a loss to half the initial margin, that position will have to be closed. For example if the initial margin to open a Germany 30 trade was €2000, that position would have to be closed by IG when there was a loss of €1000 (50% of €2000), irrespective of profits on other positions. IG feels this is not sensible.
You can read all the proposals in full here.
How will this proposal affect your trading?
While we support many of ESMA’s suggestions, we believe that the position-by-position close-out model could prove harmful to balanced trading strategies. We feel that an account-level approach is far more appropriate.
Here are two examples:
● Say you have a long Dow Jones position and a short DAX position. You’ll risk having one position closed out if losses reach 50% of your initial margin on that position, even if you are in profit on your overall strategy. This is because ESMA’s proposal disregards profits on other positions and indeed the success of your overall strategy. This could result in unnecessary extra costs, as you may need to re-establish one leg of your strategy after it is closed out.
● Imagine you have a short CFD position on the FTSE 100, to hedge a long portfolio held elsewhere. If the losses on your short FTSE 100 CFD reach 50% of your initial margin, your position would be closed. This is because ESMA suggest that even if you have enough funds in your CFD account to keep your hedging position open, your provider must close it at the 50% level. This could increase your overall risk and your end costs, as you may need to re-establish your hedge by reopening the short FTSE 100 CFD position after it’s been closed out.
Reply to ESMA now
You can respond to this proposal on the margin close-out page of your new ReplytoESMA site. We will submit all responses to ESMA on your behalf. You can also reply to the leverage proposals from here, and read trader and industry responses from across Europe.
Have your say
Please note that if you respond in this way, your comments may be published anonymously on the website.
We’d strongly encourage you to share your views on this proposal, as ESMA will shape its final decision according to the feedback it receives. The deadline for responses is 5 February.
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
T 0800 409 6789
E [email protected]
community.ig.com
#ReplytoESMA.trading
IG.com
