ESMA Will Kill Retail FX Trading in Europe: We Need to Act Quickly

YOUR OPINION AND INTERVENTION IS ESSENTIAL IN ORDER TO MAINTAIN A VIABLE TRADING ENVIRONMENT FOR RETAIL TRADERS IN EUROPE AND IN THE UK.

The ESMA has brought fourth further regulatory implementations and the most influential change is the amount of leverage available to retail traders in spot FX and CFD trading, that will be brought down to any amount between 5:1 and 30:1. This would effectively curtail retail FX trading, as it raises margin requirements and naturally reduces the "low cost appeal" that spot FX and CFD trading has had up till now.

To make this practical: right now in order to buy 10.000 EURUSD, brokers usually require €50 in margin. With the ESMA's new rules, you would need to put up €333.

There will be negative effects on brokers as well but for now, as a retail trader, I think we need to voice our thoughts and try to stop these regulators in their tracks. The ESMA has opened a consultation period for the next 3 weeks, within which time they will analyze any feedback recieved through their site.

Here is what I will be writing to the ESMA: while I am in favour of reducing the leverage for retail accounts, the ESMA should simply seek to harmonize Europe with the NFA and CFTC, hence limiting the leverage to 50:1 and nothing less.

This would mean that for a 10.000 EURUSD operation, you would be required to put up €200 for margin. It's still more than is required now, but it's a fair compromise given what the EMSA wants to do (eliminate retail trading basically).

How to Give Your Feedback to ESMA

L'ESMA ha requisiti molto specifici per inviare le tue opinioni. Di seguito sono riportati i passaggi:

1. Go to the ESMA page

2. Download the  Call for Evidence document within "Related Documents".

3. Use Microsoft Word to insert your feedback.

4. Copy/paste the questions from page 9 into Microsoft Word. You are not forced to answer all questions, but at least answer “B” and “I”.

5. Save the word document.

6. Upload your word document under "Reply Module" and insert your data.  

7. Click on "Reply". 

Hopefully the ESMA will see reason.