The European Securities Authority and Markets (ESMA) and the national regulatory authorities (NCAs) of the countries who are members in the European Union are introducing important changes which aim to further protect all non-professional clients who are trading on the financial markets.
The ESMA changes will affect all brokers which apply the MiFID directive and are licensed and regulated by the EU. These changes will apply for all non-professional BenchMark customers.
BenchMark will start applying the changes as of July 23 (Monday). Please, make sure you are familiar with them because some of those changes may lead to the automatic closing of positions.
1. Negative balance protection – the maximum amount a customer can lose will be restricted to the amount of funds available in the account.
2. New margin requirements for CFD trading:
3. New level of Stop-Out (automatic closing) – now when the equity of the account reaches below 30% from the total blocked margin the position is closed automatically. The new level will be 50%.
Frequently Asked Questions (FAQ)
Are all brokers going to be affected by these regulations?
The changes introduced by ESMA will reach all brokers who are licensed and regulated within the EU as well as those in Britain. Brokers outside of EU will not be affected, however customers need to be aware that these brokers will be regulated by the local brokerage legislation and not according to the EU law.
How will the margin and stop-out changes affect BenchMark customers?
In case you have no open positions as of 23rd July, the changes will start from the first done deal.
In case you have one or more open positions as of 23rd July and the account funds are sufficient to cover the new requirements those positions will not be changed.
In case you have one or more open positions as of 23rd July and the account funds are insufficient to cover the new requirements it will be necessary to close some of the open positions but not later than 31st July (Thuesday). In other case, on 1st August your positions will be closed automatically.
Can I trade with the old conditions?
If such opportunity occurs BenchMark will inform you in advance.
Why are those changes introduced?
The purpose for the new regulations are to lower the risk of financial losses and therefore protect the non-professional clients.
What is ESMA?
The European Securities Authority and Markets (ESMA) is the central financial market monitoring authority of the European Union. Its purpose is to improve the functionality of the markets, to protect the investors and to aid the cooperation between the national regulators which are members in the EU.
How can I prevent the automatic closing of positions?
If you have open positions and you do not have enough free margin against the new requirements that will take begin from July 23, you need to deposit funds by 31 July (Tuesday) or close some of the open positions again by July 31.
Which currency pairs will be traded with a margin of 3.33% (leverage 1:30)?
The currency pairs EURUSD, USDJPY, GBPUSD, USDCAD, USDCHF, EURGBP, EURJPY, EURCAD, EURCHF, GBPJPY, CADJPY, CHFJPY, GBPCAD, GBPCHF, CADCHF.
Which indices will be traded with margin of 5% (leverage 1:20)?
The major indices UK100, FRA40, GER30, US30, SPX500, NAS100, EUSTX50, JPN225, AUS200.
How can I test the new conditions?
The new conditions are already implemented in the demo accounts on the MetaTrader 4 platform and can be tested there.