ESMA Restrictions for August 2018

everyone is talking about the ESMA issues that will come up next month

here is a short overview of how they will reflect on you

this is a intervention ONLY!
not a Law or permanent Regulation! and is subject to update/change in November 2018!

you are ONLY affected by this change(s) if you do live in the European Union!
if you live in the United Kingdom, these changes are in effect too until “Hard Brexit” [Details] [FCA Statement]

more details on the MiFIR Website, or the ESMA Website.

CFD Accounts:

Leverage will be limited based on the Symbols you do trading:

  • 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

(sadly Major and minor is not directly defined, so that likely up to the Broker)

Margin Calls will be generally at 50% Free margin
stop-outs on “per-account base” (this widely a standard anyway on most platforms for may years already)

Negative Balance Protection (on per account base)

important here is the “per account base“,
meaning if you have 2 accounts, the Broker can not use funds from the other account to pay for margin losses.

a Note from SwingFish to this topic:
beeing “Protected” is not always a good thing, as brokers can use this as a reason to “hedge” you in order to manage the internal risks. keep in mind, there is no such thing as a free ride!

Binary Options:

as of 1. August 2018, Marketing, Distribution and/or Sale of Binary options is prohibited in all of the European Union.


the European Commission gave ESMA the power to change this regulation in 3 Months, so this is sort of a Probation for 3 months. expect some more changes to come in November.