Jump to content

These changes listed below only affect retail clients of EU firms (that are subject to ESMA regulation), and do not apply to professional clients. Please add any query, question, or request for clarification below. There are a few links at the bottom of the article which may be of interest.

Message added by JamesIG

How will the new ESMA rules affect my IG account?

Sign in to follow this  
JamesIG

If you have any questions regarding the information below please add a comment. To get the best experience on Community please make sure you LOGIN. Notifications, private messages (if required), and tagging are only possible if you are logged in.

 

In January, ESMA proposed a number of changes for leveraged retail traders within the EU region and kicked off a consultation period to open up the discussion. Over 14,600 people had their say via the #ReplyToESMA website, with an overwhelming majority opposing the regulatory changes.

On the back of the proposal and trader feedback, ESMA drew up new regulations which are set to go live on August 1. To comply with these new regulations you may notice some changes on your IG account from the week commencing Monday July 23, 2018. Although not all the regulatory changes will affect all clients (for example some regulatory changes only affect specific instruments or account types), you can find a roadmap for these changes below.


Wednesday, July 25

Collateral - Linked collateral accounts were available for clients who had both a leveraged trading account (CFD or spread bet) and a stockbroking account. As of Wednesday, July 25 linked collateral accounts will no longer be an option. If you have insufficient funds at this time your leveraged trading account will be at risk of position closures.

 

Thursday, July 26

Credit limits for retail clients (formerly known as ‘Select Accounts’) - Some clients used to have ‘Select Accounts’, which allowed for certain types of credit limits or margin rates. On Thursday these account types will be switched to ‘closing only’ (i.e. the account type and agreed terms will remain, but you can only close your positions at your convenience and no new positions can be opened under this account type). Any new position would need to be opened under a newly set up, regular IG retail account. 

 

Friday, July 27

CFD options - At 15:00 (3pm) UK time all UK and European retail CFD clients will have any open options position closed basis the IG mid-price and all option marks will be set for ‘professional only’.

662267767_2018-07-2516_34_05-MyIG.png.1fd0ee36a48c90e29d7eaf9d4bf43fe6.pngIG has recently taken a business decision to no longer be supporting options trading for CFD accounts contracted through our European offices. While we appreciate that this decision will cause frustration to those who enjoy the product, regrettably, options have become a market that no longer fits with IG’s European offering. We are currently looking into alternative products to offer to meet a similar requirement and further information will be published when available.

Closing at the mid-price means that IG will also not be charging any dealing costs to close your positions which remain open at 3pm UK time on 27th June. If you have access to a Spread Betting account (UK clients only), we will also be happy to “bed and breakfast” your trade across at the relevant, current prices, so please let us know if that is something you wish for us to do. This will need to be done over the phone as it would constitute a deal, so please give one of our trading services members a call at a time convenient, but before the above cut off date and time.

If you have a Spread Betting account, only available to UK residents, then you can continue to speculate with options. If you are a UK resident but don’t have a spread betting account you can add one in My IG by clicking on My IG > Dashboard > Add an account.

 

Saturday, July 28

A number of changes will be applied over the weekend

Margin Changes - Margin requirements to open and maintain leveraged positions was one of the more prominent aspects of the ESMA regulations. On the Saturday, July 28 new margin floors will be implemented across all ESMA retail accounts for all new positions. Existing positions will keep current margin rates. You can find more information regarding retail margin requirements here.


Negative balance protection - All retail clients contracting to ESMA regulated entities will have negative balance protection applied to their account.

Offsetting long and short positions - If a client is currently long and short a particular market then they will currently pay 10% of either leg. From July 28, clients will have to pay 100% of the ESMA margin on each position. This change will only apply on new positions, therefore if you are currently long and short the same market then you will continue to receive the concession.

Rollovers - When Retail clients futures contracts rollover and a position is opened after the July 28, then the new position will be margined basis the ESMA minimums.

Concessions - Some retail clients may receive concessions based on trade activity. ESMA regulations mean that retail clients will no longer receive any form or rebate or concession (funding concession/currency conversion concession).

 

Monday, July 30

Automatic COM (close out monitor if you have insufficient funds to cover the open trades in your account) - Retail clients will be subject to different COM ratio/available to deal calculations that will vary depending on what region you are in. You can read an overview of the ESMA margin rules from July 30th here.

 

If you have any queries or questions regarding the new ESMA regulations please add a comment below. You may also find the following links useful.

Compare our leverage offering
Professional trading

Once again, please remember that these changes only affect retail clients of EU firms (that are subject to ESMA regulation), and do not apply to professional clients. Please add any query, question, or request for clarification below.

Best
James 

 

Sign in to follow this  


14 Comments

Recommended Comments

Guest Cass66

Posted

What does negative balance protection mean? Can you give a worked example with all the math and stuff - a before and after...? 

Share this comment


Link to comment
On 7/25/2018 at 11:13 PM, Guest Cass66 said:

What does negative balance protection mean? Can you give a worked example with all the math and stuff - a before and after...? 

negative balance protection for retail accounts means you account as a whole  can't go negative. For example, imagine you have £1000 in the account and open a position which requires £300 margin. The market moves against you by £700 worth over the course of a few days so you're about to start eating into your margin. 

If the company released figures overnight and they were bad and the market then gaps down by £400 worth, IG would automatically close your trade at the best available price because you can't maintain the losses, but previously your account would be seeing a £100 debt. Negative balance protection dismisses this and you would just have a zero balance. 

Share this comment


Link to comment

I've received a number of queries and PM's relating to our European and Australian offices which I thought I may help clear up here. As previously stated, some of IG's international offices (and by extension accounts opened through those offices) will not be affected by ESMA. The same goes for professional clients

Will I still be able to call the UK office if I open an account in Australia? 
We have native English speakers in many of our offices, most notably in the UK, Australia, South Africa, Singapore and Dubai. This means that if you are a UK resident, but hold an Australian account set up though the IG.com/au website, you would still be able to call the same UK phone dealing number and speak to a UK, London based dealer or client services employee from 7am through to 9.30pm London time. You would receive the same level of service, irrespective of whether you had a UK account and/or an Australian account, and all IG dealers from all our international offices would be able to help on any account type. 

Do UK spread betting and Australian CFD accounts allow you to trade the same markets?
The majority of the markets you trade will be exactly the same irrespective of where you hold an account. If you opened an IG account in Switzerland for example, you would still be able to deal on the FTSE, UK stocks and shares, and all the same future markets which you currently have access to. 

What are the differences between CFD and Spread betting?
Spread betting and CFD trading are both leveraged products – enabling you to open a position while putting up just a percentage of the capital. Though they share many benefits, there are key advantages unique to each. You can check out more using the links below.

Comparison https://www.ig.com/uk/spread-betting/spread-betting-vs-cfds
What is CFD trading? https://www.ig.com/uk/cfd-trading/what-is-cfd-trading
Examples https://www.ig.com/uk/cfd-trading/cfd-trading-examples
Benefits https://www.ig.com/uk/cfd-trading/benefits-of-trading-cfds
How CFDs work https://www.ig.com/uk/cfd-trading/how-does-cfd-trading-work 

Can someone give me a CFD trade example relating it to Spread betting? 
Put simply say you trade $10/pt on oil via a spread bet. If you're looking at trading a CFD, rather than bet a 'per point' value, you would look to buy contracts which have predefined values. Say a contract in oil had a contract size of $10, you would only buy a single contract. In both examples if the market moved a single point you would make/lose $10. If you only wanted to make/lose $5 per point movement you would look to buy half a contract. Check out the examples here: https://www.ig.com/uk/cfd-trading/cfd-trading-examples 

Share this comment


Link to comment

How can I trade now in this new condition guys?

You put me out of the game as a retail trader and I'm not qualifying as a professional trader.

Any advice?

Thanks 

Share this comment


Link to comment

Hi @Caseynotes, I was wondering why you mention the MT4 platform specifically? I don't use it, and so just wanted to check whether I'm missing something here. I assume the margin requirement is the same as for mini contracts on the regular IG platform? (At the moment a mini contract in EUR/USD requires £296.60 margin on the standard IG CFD platform.)

Thanks!

Cate

Share this comment


Link to comment

Hi @cate, IG seem to be re-writing and re-loading pages as they go which is understandable. I was just pointing out that on the mt4 platform the minimum bet size on eur/usd is £0.10p instead of the £1.00 on the web based platform. Some time ago there was the same on the web based cfd but that has gone and now £1/point is called a mini lot so the mt4 10p/point I guess must now be called a micro lot.

So the margin percentage remains the same but with the bet size reduced then so is the margin required.

https://www.ig.com/uk/help-and-support/spread-betting-and-cfds/fees-and-charges/what-are-igs-forex-mt4-product-details

 

  • Like 2

Share this comment


Link to comment

Hey MT4 gurus, is it only my terminal (LIVE and Demo) shows my spread-bet account leverage as 200 and MARGINREQUIRED returns pre-ESMA value? e.g. EURUSD(£) 1 lot = £1 per 0.00010 move  - margin 5.8

However, placing a £1 bet gets AccountMargin() a 'proper' value. 

How to fix it so that my EA can calculate it correctly? or do I need to do a complex math with relations for spread-bet of 0.45% requirement in 1:200, to 3.33% in the new 1:30 leverage. 3.33% of what then, if it is a bet?

Thank you in advance for clarifying.

Share this comment


Link to comment

Thanks, Casey. I think that is too 'advanced' - a margin calc for hedged positions ? and might be a real drag on timing while you calculate and make a decision

Besides, for working with EA, such a calc needs to be scripted into the EA to consider in advance and advise as such, in line with selected money management strategy. Though, it is not a big deal if your terminal provides the correct 1 lot required margin, hedged margin %, and your current equity.

Share this comment


Link to comment

Hi @rms83 - I believe one of our support guys, Will, emailed you directly this morning. Please keep and eye out for it in your registered email address. Thanks. 

Share this comment


Link to comment
Guest TradingTimes

Posted

Will IG change the EU ESMA Laws after Brexit in the UK?

 

Really need to know this as the new laws have made it virtually impossible for me to trade the way that i did before.

 

as the Law is EU based they should definitely consider changing the law or completely get rid of it all together.

Share this comment


Link to comment

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×