The European Securities and Markets Authority (FCA) has announced that it is implementing a number of restrictions in relation to the provision of CFDs to retail clients including leverage limits of between 30:1 and 5:1.
This will result in changes for all retail clients, but you can qualify as a One | Professional client to maintain your existing margin rates.
PROFESSIONAL CLIENT VS RETAIL CLIENT COMPARISION
If you buy 1 lot of EURUSD at a price of 1.1850
IT IS IMPORTANT THAT YOU UNDERSTAND HOW A PROFESSIONAL CLIENTWILL BE TREATED DIFFERENTLY TO A RETAIL CLIENT
PROTECTIONS THAT REMAIN
Client money protection: We will still treat your money in accordance with the FCA’s Client Money Rules and keep it protected in a segregated account, separate from our own money
Financial Ombudsman Service: As an individual, you will still have rights for redress if you remain dissatisfied with the outcome of a complaint to us.
Financial Services Compensation Scheme: As an individual, you remain eligible for compensation from the FSCS for up to £50,000 (or equivalent) that you hold with us.
PROTECTIONS YOU WILL LOSE
Risk Warnings: We will not have regulatory obligation to provide you with the current risk warnings that we provide to retail clients or any standardised risk warning that is introduced in future in relation to transactions in complex financial products.
Communications: There are certain regulatory requirements relating to the form and content of communications with retail clients that mean we must use language that is clear, fair and not misleading. As a professional client we can use more sophisticated language when communicating with you.
Best Execution: When executing your orders we owe you a duty of best execution. For retail clients we must prioritise overall price and cost of a transaction. As a professional client, we may prioritise other factors such as speed and likelihood of execution. In practice however, we will not change the way we execute your oders.
|Maximum available leverage||Professional Client||Retail Client|
HOW DO I QUALIFY?
In order for us to classify you as a professional client we must assess your expertise, experience and knowledge, and be reasonably assured that in light of the transactions and services envisaged, you are capable of making your own investment decisions, understand the risks involved and are able to bear those risks. In making our assessment, web may rely on information we already possess about you and/or request additional information from you. In addition to this qualitative test, you must also satisfy at least two of the three quantitative criteria below.
You have traded CFDs or forex an average of 10 times in each of the last four quarters (either with Portex Markets or another provider(s)).
You hold an investment portfolio exceeding €500,000 (which means shares, debt instruments and cash deposits made to fund/profits from investing in derivatives). It does not include property portfolios or direct commodity ownership.
You work or have worked in the financial sector for at least one year in a position that has given you a knowledge of CFD or foreign exchange trading.