New ESMA regulation

In early August 2018, the European Securities and Markets Authority (ESMA) will be introducing new regulation aimed at increasing conduct standards across the retail CFD sector.

ESMA adopts final product intervention measures on CFDs

The European Securities and Markets Authority (ESMA) has announced its decision to implement intervention measures which include a limit on the amount of leverage that can be offered to retail traders, a 50% margin close-out rule, and negative balance protection. The ESMA deadline for the implementation of these changes is the 1st of August 2018.

LCG will implement the new measures, which will take effect on clients trading accounts during the weekend of 28th and 29th of July.

Please note that the below mentioned restrictions will not be applicable for professional clients.
For more details on the benefits and how to apply to become a professional client please click here.

The product intervention measures ESMA has adopted under Article 40 of the Markets in Financial Instruments Regulation include:

1. Leverage limits

The main difference you will experience is an increase in margin requirements. Please see the table below for details on the changes.

Asset class Maximum leverage from July 29th market open
Major FX – currency pairs containing any two of the following: USD, EUR, JPY, GBP, CAD, CHF 30:1
Minor FX – all other currency pairs 20:1
Major indices - UK 100 , Wall Street, Germany 30, US 500, US Tech 100, EU Stocks, France 40, Japan 225, Australia 200, US Dollar Index 20:1
Minor indices – all other indices 10:1
Gold 20:1
Commodities - Silver 10:1
Shares 5:1
2. A margin close out rule on a per account basis.

This will standardize 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;

3. Negative balance protection on a per account basis.

This will provide an overall guaranteed limit on retail client losses;

How my account will be affected

Important information for all LCGTrader accounts and all MT4 accounts on LCG-Live2 server (MT4 account numbers between 5000000-5999999)

Please read carefully how this implementation might affect your account and the steps you may need to take:

  • • If you do not have open positions after the market close on the 27th you need take no action, your account will remain as is with your pending orders intact, however new positions opened after the market open on the 29th will be subject to the new margins.
  • • If you have existing open positions after the market close on the 27th July and wish to hold them, your account will be placed in a close-only mode (meaning, you will only be able to close any open positions and you will not be able to open any new positions on this account after July 29th market open). Additionally, any pending orders still resting at the time will be cancelled, except for Take Profit & Stop Loss orders.
  • • If you wish to keep your existing positions open after the 29th of July and continue trading, you will need to open a new trading account for any new orders that will be subject to the revised margins. You can quickly open a new trading account by login in to your MyLCG page and select the Add Account option.

Important information regarding all MT4 trading accounts on LCG-Live1 server (MT4 account numbers between 100000-299999 and 10000000-19999999).

Please read carefully how this implementation might affect your account and the steps you may need to take:

  • • Any pending orders still resting after market close on the 27th July will be cancelled, except for Take Profit & Stop Loss orders.
  • • All trading accounts will be placed in close-only mode (meaning, you will only be able to close existing open positions should you have any and you will not be able to open any new positions on this account.
  • • To continue trading you will need to open a new trading account and through MyLCG transfer any existing funds to it. You can quickly open a new trading account by login in to your MyLCG page and select the Add Account option.

CFD trading is high risk and may not be suitable for everyone.