ESMA: some EU brokers are trying to get around their harsh rules

ESMA's harsh rules were introduced in 2018, but some brokers have yet to adhere to them! 

In early July, the regulatory agency brought up those brokers who provide CFD trading services to traders. 

The agency - whose acronym stands for European Securities and Markets Authority - listed some activities that are of concern to it, such as the classification of traders as professionals and the marketing of trading services in foreign countries.

They are especially worried about the ease with which traders can be classified as pros, which means that they could access higher leverage levels that may endanger their initial trading capital.

European brokers use foreign subsidiaries so they can overcome obstacles

In addition, ESMA mentions that some European brokers are encouraging local traders to shift their trading activities to their foreign sister-companies that aren't victims of ESMA's harsh rules.

Although investors can legally open accounts abroad, those brokers over there can't directly market their services to European traders.