Professional qualifications & margins

[ChrisMahoola]

Hi, I've seen a warning pop up about the proposed new margin requirements.  One of the conditions is that you've received some professional training.  My question is, what would be the minimum required for this and how much would the course be especially for self training.  I could think of it as an interesting opportunity!

 

Thanks, Chris

[Tudor2]

blatant squeezer of clients ...

[Guest MakJagger]

Sorry to bump this old thread, but does anyone have any idea when these regulations could be implemented?

 

For example the margin factor for DOW is 0.5% - will this increase be between 3.33 to 20% (and applicable on spread bets too?)

 

Surely this is a silly move from the FCA, as most punters will simply go to overseas providers with the low margin factors - hence IG will lose half their clients?

 

Personally although having over 10 years of trading experience and trade regularly with large £pp, I wouldn't qualify as a 'professional' (IT background) and certainly do not have £500,000 of cash in my pot to play with...

[Caseynotes]

I don't think a date has been set for the final decision from ESMA following the call for impact statements on their proposed changes to leverage limits and margins, the deadline for which was on the 5 Feb.

 

https://www.esma.europa.eu/press-news/esma-news/esma-consults-potential-cfd-and-binary-options-measures-protect-retail

 

 

[Caseynotes]

Good points raised here and all are valid, to add my two pennith.

 

The raised margins will just mean having to hold more money with IG and not in an interest paying account, just as many will lose, only more slowly, and when you have an edge the potential for gains is now dramatically reduced.

 

The trade off of having limited loss seems unfair on those who understand the risk, in the last 6 years I only saw two black swan events in FX both of which were obviously high risk in advance, euro/swissie (a central bank was manipulating the market) and gbp on the brexit vote, both high risk/volatile plays. IG wrote off the debt of those who were unwise in their circumstances (couldn’t actually pay).

 

The EU authoritarian autocracy beggars belief, to call for replies to proposals, express acknowledgment of the overwhelming response to the negative by retail traders who obviously understood the issues and then to completely ignore them.

 

A cap on competing companies continually upping the ante by offering ever increasing leverage is understandable but this ESMA diktat is (and was meant to be) draconian, but why? Big financial houses in London are starting to express their concern not least because of the ridiculous increase in margin for shares, retail are a big market for this asset, especially in the UK.  

[Guest MakJagger]

Thanks for the replies....

 

Could someone from IG confirm if spread bets (on indices, forex) are also applicable or just CFD's and binaries?

[JamesIG]

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wrote:

Thanks for the replies....

 

Could someone from IG confirm if spread bets (on indices, forex) are also applicable or just CFD's and binaries?

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Hey  - so of course we don't know until we know, but yes - it's expected that this will apply to everything including spread bets because ESMA groups both leveraged trading options (CFD and Spread) under the same terminology. 

[Tudor2]

what a total joke - even though we are leaving the EU .. we are ment to bend over for ESMA margin shambles at whatever figure they can throw a dart at !

IG should be telling them its doesn't apply .....as we are not going to be in EU going forward .

[rimmy2000]

Hmm, well it does apply because at the time of implementation we (UK) are bound by the rules. And not everything that comes out of the EU is bad. We (again, UK) are also adopting GDPR 2018 regulation irrespective of Brexit. 

At the end of the day, this looks to be short term pain for medium term gain. It just means adding more weight to back your positions. I don't see that as inherently bad, unless one professionally trades and makes a living from leveraged bets on Major Indices, I don;t see it as a major overhaul. Could have been worse, imo.

[Kodiak]

Yes, it could have been worse (a total ban of CFDs?)

 

well to be honest this is a good thing when next black swan arrives and if using high leverage

 

"Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses; "

 

and this can also be good if someone get stuck in a losing position or move the stop in the wrong direction trying to avoid a loss (i think we all have been there sometime?)

 

"A margin close out rule on a per account basis. This will standardise the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail client’s open CFDs;"

[Tudor2]

more weight is an understatement  the proposed margin hikes are absurd...retail customers best leave and just watch IG go under fast !

[Kodiak]

When things like this happens, and they do 

 

https://www.independent.co.uk/news/business/analysis-and-features/how-could-a-teacher-on-18000pa-lose-280000-spread-betting-10115157.html

 

then a negative balance protection is the only way to survive

 

 

[rimmy2000]

Nonsense. Which margin hikes are absurd? Moving shares margin from 7% to 20% is reasonable, not absurd. I added to my SB account tonight, partially in anticipation of this. Have no qualms with it.

Why would IG go under! Its not like IG are introducing this arbitrarily and customers will go to another provider. It will affect all providers. People either accept it or close their accounts. Most will have the means and sufficient time to scale positions accordingly to re-balance risk. After all that is all its about: rebalancing weightings.

[rimmy2000]

 

"

When things like this happens, and they do 

https://www.independent.co.uk/news/business/analysis-and-features/how-could-a-teacher-on-18000pa-los...

then a negative balance protection is the only way to survive"

 

Exactly, how has this example done anyone any good. Its a Lose Lose situation: The punter is deeply out of pocket, shamed and potentially in a life changing situation, the SB provider (here IG) have legal costs and the risk of never seeing that money returned. 

And it all suggests that the punter was massively overweight and did not understand the risk involved, or their notional liability in that open position. 

Trading currency has inherent risk through volatility, and losing £280k means you are taking a heavy position. If I trade indices I do it with miniscule amounts because I UNDERSTAND THE LEVERAGE I AM TAKING ON. This isn't rocket science, and jeez, if people don't understand these basics they stand no chance in the markets.