How is Brexit affecting the new ESMA CFD regulation?

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ESMA regulation is binding to all members of the EU. The process of Brexit is ongoing, with a planned withdrawal dated to Mar 30, 2019. Given its steps into force, the UK will no longer be part of the EU. Currently what is known that the FCA expects to consult on whether to apply ESMA measures on a permanent basis to firms offering CFDs and binary options to retail clients.

What are the next steps?

ESMA is awaiting reactions from the CFD brokers and also welcomes client feedback before putting the final text in the Official Journal of the EU, after which the regulations would start to apply within two months. The new measures will first apply for three months, at which point they may be renewed.

When are measures stepping into effect?

• Binary options brokers are prohibited to market their services to retail clients.
• Fx and other CFD traders are facing the new regulatory conditions from 1 August 2018.

It is suggested that traders review if their opened positions comply with new margin requirements set by ESMA. Clients having stretched CFD positions risk having a margin call on their investment accounts. The maximum leverage setting will be 1:30 for major Fx pairs and even smaller for less liquid CFDs.

Reprinted from Brokerchooser, the copyright all reserved by the original author.