On 1st August 2018, the Financial Conduct Authority, guided by ESMA’s product intervention measures, introduced a raft of changes to the CFD and spread-betting industry. These changes are being implemented by European regulators and affect ALL EU-regulated FX, CFD and spread-betting providers, and will significantly impact the way you can trade moving forward.

Please note, the below changes does not impact Elected Professional clients. For more information on Elected Professionals, please click here.

What are the changes introduced by ESMA?

Watch XTB’s short video

1: Leverage is reduced

While there are three major changes, arguably the largest is the reduction in leverage – including limiting leverage to a maximum of 30:1 for major FX pairs and 20:1 for major Indices. Here’s a table of the leverage changes for each asset class:

CFD instrumentsPrevious LeverageLeverage from 1st August
Major FX Pairs


Minor FX Pairs


Major Indices & Gold

Eg DE30, US30


Eg Silver, Oil

Equity CFDs

Eg Facebook, Barclays


Eg Bitcoin, Ethereum


Essentially this means that if you want to retain the same level of exposure in the market you’re trading, a larger amount of margin will be required. Take a look at how this affects a popular FX pair like EURUSD:

 Previous LeveragePost ESMA Leverage
Size1 Lot1 Lot
Margin requirement£436£2900

As you can see, to trade the same size as before on EURUSD, you need to have over three times more margin on your account. If you’re looking to trade an index like the DAX, you’ll need five times the funds in your account for the same position. For commodities like oil, it’s 10 times the original margin requirement.

 2: 50% Margin Close Out

Margin closeouts – which previously varied from broker to broker – will now be set at 50% as standard. This means that if your margin is approaching 50% (instead of 30% for example with XTB) your largest losing position will be automatically closed on your behalf, as a safety mechanism to prevent you from incurring further losses.

3. Cashback and other incentives

All monetary and non-monetary based incentives such as Cashback and Refer a Friend schemes are banned by the Financial Conduct Authority. Therefore, all cashback agreements and other incentive based agreements were terminated by 31st July 2018.

Professional clients are unaffected by theses changes

As a result of these measures, many traders are considering upgrading their status from Retail to Elected Professional. Why? Because these product intervention rules only affect traders who are classified as ‘Retail’, meaning that Elected Professionals can still trade with their normal leverage levels i.e. 200:1. It’s also important to note that not everyone can elect to become a professional client. Only those clients with sufficient trading experience and understanding of the product can do so, both of which are validated by a quantitative and qualitative test by the broker. Find out more here.

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