European Securities and Markets Authority (ESMA) will start to apply the new regulation from 1 August 2018 for CFDs.

The new regulation will change the existing setting of clients account regarding margin and leverage.

The new changes will hamper usage of margin for retail clients, the changes are as listed below:

  • 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;
  • A margin close out rule on a per account basis. This will standardise the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail client’s open CFDs;
  • Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses;