FX MARKET REGULATIONS
incentivise brokers to help their clients become more profitable.
Effects on Traders
There are two groups of affected parties by the rules mentioned above. The brokerage companies the
are
trading volumes will
first one: undoubtedly
decline, at least initially, in addition the costs of running a business will likely increase due to a variety of factors which we will review later. The group that is undoubtedly larger in numbers consists of
the traders
themselves. Some of them have never asked for additional protection don’t
want sacrifice
and to
their
dreams of getting wealthier from trading the financial market. Te ESMA has developed a panacea cure which aims to eliminate any threats to retail investors, however if we are to adhere to the free markets principle, the end clients themselves would need to be the ones who choose under what conditions they trade.
18 FX TRADER MAGAZINE July - September 2018
shift in the retail trader brokerage market stemming from ESMA’s decision is very dangerous for the industry and ultimately for the traders themselves.
There are legal ways to go around the tough leverage restrictions which the pan-European regulator is preparing to implement. Many
Reclassifying to Professional Trader is a legal way to go around the tough leverage restrictions
The decrease in trading leverage will make it much more difficult for traders who are coming to the market with a dream to change their livelihoods and let’s face it, that is probably the majority of traders worldwide. The tectonic
brokers have devised products which are offering higher leverage to
professional clients. Brokers
don’t have the right to solicit clients to become professionals, but if the customer so chooses and is covered by two of the three conditions to become
a
professional client, he/she can
one.
become So
what are the criteria you might ask?
- You have transacted a s igni ficant size
the
of
v o l u m e in
appropriate m a r k e t ( s p r e a d b e t t i n g , forex
or
CFDs and the average f r e q u e nc y has been at
least 10 transactions per quarter over the previous four quarters (significant size means above €10,000 for shares and above €50,000 for forex, indices or commodities).
- The size of your financial instrument portfolio, including cash
deposits and financial
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