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Trading & Products

ESMA Regulations

The European Security and Markets Authority (ESMA) announced new regulation standards for leveraged trading, which will come into effect on Wednesday 1st August 2018. Please find all details about the regulations and how your trading activities will be affected on this page.

About ESMA

In the beginning of this year ESMA proposed major changes to leveraged trading, which has been intensely discussed within the industry. FCA regulated brokers as well as their clients have been involved in the debate. In early May this year, ESMA announced the details about its new policy, which will come into effect on 1st August 2018. The key changes will be:

  • Restricted leverage on spread betting, CFD and forex products,
  • Raised stop-out levels to 50%,
  • Negative balance protection.

Restricted Leverage – ESMA Product Groups

Please find ESMA’s proposed leverage changes for each product group in the table below:.

Product Group
Major FX pairs
Major Indices, Minor FX pairs, GOLD (XAUUSD)
Commodities (excl. Gold) Minor Indices
Cryptocurrencies
Bund
Equities
Current Maximum
Leverage
Maximum Leverage From
1 August 2018
Additional Margin Required
For Retail Clients
400:1 30:1 14x
100:1 20:1 5x
100:1 10:1 10x
2:1 2:1 -
200:1 5:1 40x
20:1 5:1 4x

Negative Balance Protection

The new ESMA ruling will ensure that retail traders will not lose more than the money available on their account. If your retail trading account becomes negative, the provider (GKFX Financial Services) will now be required to bring the balance back up to zero. This rule will be applied on 1st August 2018 across all retail GKFX trading accounts.

Roadmap at GKFX – Next Steps

GKFX will implement the required ESMA changes in 2 steps:

  • 1) Weekend 28th/29th July 2018:

    The stop-out level will be raised from 10% to 50% across all accounts.
    This will impact your trading activities from market opening on Sunday evening, 29th July 2018 at 22:00 UK time.

  • 2) Wednesday 1st August 2018:

    Margin levels across all products will be increased from 08:00 UK time onwards.

Please be aware that both changes will have an impact on your trading activities and you will need to hold sufficient funds to maintain your open positions, or manage them accordingly.

GKFX’S Products Listed According to ESMA’s Product Categorization

Below you will find a non-exhaustive overview of GKFX’s product offering and their new leverage requirements. They are listed based on ESMA’s product groups.

Category Foreign Exchange Indicies Bonds Commodities Crypto Equities
Leverage 30:1 20:1 20:1 10:1 5:1 20:1 10:1 2:1 5:1
Sub-Category Major FX Minor FX Major Indices Minor Indices Bonds Commodities Commodities Crypto Equities
Products CADJPY AUDCAD CAC40 AEX25 BUND GOLD BRENT Futures BTCEUR UK Equities
CHFJPY AUDCHF JPN225 DXYSPOT   XAUUSD BRENTSPOT ETHEUR US Equities
EURCAD AUDHKD AUS200 ESP35     COCOA BTCUSD DE Equities
EURCHF AUDJPY ESX50 HK50     COFFEE ETHUSD FR Equities
EURGBP AUDNOK DAX30 (Spot and Future) HK-Shares     CORN Futures DSHUSD CH Equities
EURJPY AUDNZD NAS100 (Spot and Future) SMI20     COTTON LTCUSD NL Equities
EURUSD AUDSGD SP500 (Spot and Future)       HGC (Copper) Futures XRPUSD PL Equities
GBPCAD AUDUSD UK100 (Spot and Future)       NG (Natural Gas) Futures   ES Equities
GBPCHF CADHKD WS30 (Spot and Future)       SILVER (Spot & Futures)    
GBPJPY CHFTRY         SOYBEAN Futures    
GBPUSD EURAUD         SUGAR    
USDCAD EURCNH         WTI Futures    
USDCHF EURCZK         WTISPOT    
USDJPY EURHKD         XAGUSD    
  EURNOK              
  EURNZD              
  EURPLN              
  EURSEK              
  EURSGD              
  EURTRY              
  GBPAUD              
  GBPCZK              
  GBPEUR              
  GBPHKD              
  GBPHUF              
  GBPNZD              
  GBPSEK              
  GBPSGD              
  GBPTRY              
  HKDSGD              
  NZDCAD              
  NZDCHF              
  NZDHKD              
  NZDJPY              
  NZDSGD              
  NZDUSD              
  USDCNH              
  USDCZK              
  USDHUF              
  USDNOK              
  USDPLN              
  USDSEK              
  USDSGD              
  USDTRY              

How Will These Changes Affect Your Trading Activities?

Below we would like to provide you some trading examples, which will help you to understand the new ESMA rules better.

The required margin will increase across all products and you will need to add additional funds to your trading account or manage your open positions to avoid being closed out at market.

Working Examples For Clients Trading on FX/CFD Trading Accounts

FX/CFD Account
Product Group Current Maximum Margin Current Maximum Leverage Maximum Margin from 1 August 2018 Maximum Leverage from 1 August 2018 Additional Margin Required for Retail Clients Product Volume Current Leverage New Leverage Current Market Price* Curent Margin New Margin
Major FX Pairs 0.25% 400:1 3.33% 30:1 14x EURUSD 1 Lot 400:1 30:1 1.17466 EUR 250.00 EUR 3334.00
Major Indices 1% 100:1 5% 20:1 5x DAX30 5 Lot 100:1 20:1 12785.8 EUR 639.29 EUR 3196.45
Minor FX pairs EURNZD 1 Lot 200:1 20:1 1.67345 EUR 500.00 EUR 5000.00
GOLD (XAUUSD) GOLD 0.1 Lot 100:1 20:1 1298.2 USD 12.98 USD 64.92
Commodities (exd. Gold) 1% 100:1 10% 10:1 10x WTISPOT 3 Lot 100:1 10:1 65.88 USD 197.64 USD 1976.40
Minorindices ESP35 10 Lot 100:1 10:1 9760.5 EUR 976.05 EUR 9760.50
Cryptocurrencies 50% 2:1 50% 2:1 - BTCUSD 0.1 Lot 2:1 2:1 6416.4 USD 320.82 USD 320.82
Equities 5% 20:1 20% 5:1 4x BPUK 20 Lot 20:1 5:1 589.11 GBP 589.11 GBP 2356.44

*Please note that this was the market price at the time the example has been generated.

GKFX Professional Clients

The new ESMA margin changes will not affect GKFX’s Professional Clients.

In order to find out more about the requirements to become an Elective Professional Client with GKFX, click the link below.

Need Help?

We are here to help you with any further questions regarding to this topic. Please contact us on phone +44 (0) 207 186 1212 or on email support@gkfx.com.
Our office hours are Monday to Friday between 07:00 and 18:00 UK time.

GKFX is a registered trademark of GKFX Financial Services Limited © 2017 GKFX Financial Services Limited – all rights reserved.

RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81.75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. See our full Risk Warning and Terms of Business for further details.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81.75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. See our full Risk Warning and Terms of Business for further details.

81.75% of retail investor accounts lose money when trading CFDs with this provider.