ESMA -- The World's New #1 Nanny Regulator

Maximum allowable retail leverage – 30:1 on major pairs, 20:1 on non-majors

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As expected. Useless prats.


Had to look it up –

prats (plural noun)
an incompetent, stupid, or foolish person; an idiot.
synonyms: idiot · ass · halfwit · nincompoop · blockhead · buffoon · dunce · dolt ·

Yup. I think that describes them to a T.

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This is no help at all to anyone except the civil servants and politicians. Saves them from lots of name-calling from people who lose their money through taking stupid risks and then complain loudly like only stupid people know how to.

Can someone please explain.

CFDs on major FX pairs will be traded with 30:1, indices, non-major currency pairs and gold will be traded at 20:1, while other commodities and non-major indices will be provided with a 10:1 gearing.

It’s NOT CLEAR. CFDs usually close at the end of the month, as I recall. Does this new leverage apply to Spot Forex too?


It’s just a way of regulating the crooked CFD and Binary industries, which have lamentably failed to self-regulate.

This is what inevitably and reliably happens to industries that won’t regulate themselves effectively.

You got that right.

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Not only the Civ’s and the Poli’s, think about it from the Brokers point of view… the micro account market ($50 - $500 accounts) will be pushed out of CFDs and Binaries.

A micro position @ 30:1 (0.01 - $1,000 = ~$49 margin) currency dependent) 1 Lot = ~$4800 margin…

Now the remaining players will now have to deposit even more funds with their Broker (at no Interest) to continue with the same strategy or curtail their position/risk sizing.

Edit: I hope everyone is aware that the Brokers (or LP’s) collect interest on all monies on deposit…so larger accounts are undeniably in their interest…

As happened in the US Financial system after the GFC the major financial houses steered the Government on policy.

It would be interesting to know just who has the ESMA’s ear on this, the Financials (read: Banks) or the Governments…

Yes, it drives money into the industry accounts. The brokers take larger deposited funds while the people who would have chanced their arm at DIY trading now either leave their money in their high street bank current account or invest it with some corporate.

No help at all to me. I really hoped (and still hole out a tiny vain hope) that as I’ve got 15 years continuous spreadbetting experience I should be allowed to trade with whatever leverage I can stand. I don;t need the “help” and “protection” the new customers are said to deserve. I’ll have to explore this “professional account” deal that’s come up.

The other negative that comes to mind is the Pop-up MM’s based in the Marshall Islands, Seychelles, Belize and Cyprus etc…will be licking their collective chops…

They’ll jump on the “trust us, your account will be safe” lower leverage wagon, Minimum deposits will increase, more funds required to be transferred to new accounts and BANG…punters will lose more money before they even start…

Just lucky I’m not inside the "Bank regulated" US or totalitarian EU Financial systems…Oz will be next…

Oh well. This will for sure push away many retail clients who don’t have 10k for trading. This “will guarantee greater investor protection across the EU by ensuring a common minimum level of protection for retail investors” and this will also reduce the amount of investments that will need protections. IMO such change will force many brokers to search for ways to get around this limitation. We’ll see how it goes…

Quick note - Cyprus is actually in the EU now… and has been for some time.

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Hey Bradley… Thanks for that…they seem to get a mention in a lot of Brokers behaving badly posts here on BP.

Maybe their internal financial regulation is more susceptible to foul play…

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That’s exactly the point.

That’s why so many dodgy, unethical and crooked counterparty market-makers who are pretending to be “forex brokers” choose to be regulated there.

It’s basically the same, from their perspective, as being unregulated, because their customers have no real protection at all, but it enables them to say “we’re EU regulated” in all their spammy promotional materials.

That’s the whole value of it, to them.

And that’s why the more warnings there are in forums to advise new traders to avoid “brokers” who are only regulated in Cyprus, the better.


The original press release calling for evidence says:" relating to the provision of contracts for differences (CFDs), including rolling spot forex, and binary options to retail investors. "

While this is not specified anywhere I can see in the information released today, i’d be surprised if spot forex is not included, since it was specifically mentioned and tied to the CFD element in the consultation period.

That is how I read it anyway. Although it’s absence now is interesting and hopefully meaningful.

Shows what a game FX is then when both Spotware (Ctrader) and Metaquotes (Metatrader) are both headquartered in Limassol, Cyprus…This surely has to be a warning on the industry as a whole…

No real traders involved, No institutions, Just you and the game platform being run by the RFED.

Hello, artisan

That’s how I read it also.

Back in December, I posted the following:

[For emphasis, I have added bold type in your quote (above), and in my quote (which follows).]

And LeapRate appears to interpret that language in the same way, also.

Here is their article on the ESMA announcement:

Excerpt (bold type added) –

"The new measures will be published in the coming weeks in the Official Journal of the EU (OJ) and will start to apply one month, for binary options, and two months, for CFDs, after their publication in the OJ.

In brief:

  • Forex and CFD leverage will be limited to 30x, and that just for major currency pairs. Lower leverage (see more below) will be enforced on non-major currency pairs, gold, indices, other commodities, individual equities and cryptocurrencies.

  • Binary Options are banned.

  • Margin close out rule on a per account basis.

  • Negative balance protection on a per account basis."

On related topics, here are two articles from Finance Magnates, reporting comments on the ESMA announcement by two brokers, IG Group and Gain Capital:


“Most importantly, the ESMA has proven that the fabric of the European Union’s institutions is shifting into a direction that is only welcoming to big corporations with the accompanying lobby groups.”


“Despite its stated aim to protect individual investors from losing money, some brokers say that the proposed 1:30 to 1:2 leverage will increase the traders’ risks, because they will need to deposit more capital upfront that they could potentially lose. In addition, those not able to deposit the necessary margin capital might be tempted to use offshore market makers in loosely regulated jurisdictions.”

That was my understanding at first. But then I had a look into it. Most of the big and stable (at least, for now) brokers that are regulated by CySec have chosen it simply because Cyprus is kind of a safe haven from the high taxes that most western european countries have.
Their low taxes and fees for companies of all kinds makes that island a great place to develop your business whilst maintaining a high profit margin.
There is no argument that there are some shady companies over there. It’s just that in my opinion they are more of an exception now, rather than the general rule (like it was before the EU).

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I agree with the previous comments. These “draconian” measures will definitely push away the “small” players. I am happy abot the binary options ban (we all know about this pure scam) and the bonus scheme but the other steps are a bit too extreme. Someone is definitely trying to kill the retail business. I guess they don’t need the humble investments of the “little folks”.[quote=“tommor, post:8, topic:142542”]
I don;t need the “help” and “protection” the new customers are said to deserve. I’ll have to explore this “professional account” deal that’s come up.
I completely agree, besides most reputable and serious brokers have a system with which they categorize their clients so if you are a total newbie without any experience and knowledge base, you will not be accepted or at least higher leverage will not be provided. As for the professional account type - isn’t a larger investment required there?

I emailed MarketsWorld today, actually I reached out to them on a live chat and they had this to say

" Jess, I have a question concerning the recent ban from the European Securities and Markets Authority (ESMA) regarding binary options. I’ve read it will be enacted within a month, does this ruling affect MarketsWorld and their clients as well?
at 10:35, Mar 29:
Due to our licensing as a fixed odds betting service no, we are not currently affected although our licensing and legal team are looking into it at this time"

What do you think about this? They’re the only regulated broker that I know of over seas. I don’t have a large account with them but wanted to see what their response would be anyhow.

Aaaand there is the loophole in the system.
ESMA has banned binaries, but they cannot regulate the betting services. Which is why I fear we may see a resurgence of small scammy betting services.
Note to self - always read the T&Cs, what is the company registered as and double check.
The other thing that I forsee happening very soon, is brokers registering subsidiaries in offshore (unregulated) zones, so that they can continue offering higher leverage rates to their clients.