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#1 04-06-2018 22:19:34

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2200
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ESMA restrictions will also apply to non-EU clients

ESMA restrictions will also apply to non-EU clients


http://www.forex-central.net/forum/userimages/ESMA.png


Article originally published by Leaprat:

Cyprus financial regulator CySEC has issued a clarification circular (see full text below) following numerous inquiries it received in the wake of ESMA’s plans to move forward with new, restrictive rules governing online brokers.

ESMA’s new rules – finalized in late March and set (just as of last week) to come into effect in two stages in July and August – limit leverage on CFD and Forex trading to 30x for major forex pairs and less on non-majors, commodities, indices, share CFDs and cryptocurrencies (just 2x). The rules also ban Binary Options altogether, mandate margin close and negative balance protection, ban all trading “incentives” by CFD providers such as deposit bonuses, and require specific risk warnings be delivered to clients in a standardised way.

The CySEC note to licensed CIF brokers indicates very clearly that the new rules will apply not just to clients which brokers take from within the EU, but also very much applies to clients from outside the EU who deposit and trade with the EU-licensed broker.

Many EU licensed brokers maintain offshore subsidiaries and/or legal units in other regulated regions such as Australia, which still allow higher levels of leverage and deposit bonuses and other inducements. However, increasingly clients from other regions (such as China) are “getting smart”, and want their account to be with the FCA or CySEC licensed subsidiary, knowing that there is proper European oversight and protection of their accounts. As such, it has been increasingly more difficult for brokers to shift their non-EU clients to offshore affiliates, where everything from capital levels required to trading rules are a lot more lax.


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