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Professional qualifications & margins

Question

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

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Well there's not many outside the EU that provide CFD and spreadbetting I'm afraid, it's banned in the USA (not sure about Canada) and you'll have a pretty hard time finding a replacement company (I looked before)

 

@ChrisMahoola With a grand, yes it'll be pretty much useless, I mean personally I wouldn't go through all the stress and time of trading, scouring through charts and economic data/news for the sake of 50p a point....so the ESMA move will no doubt get rid of the "newbie novices" who are just about making ends meet with a normal day job..

 

All in all - it's not good for the average poorer punter (who probably does £5pp on a small pot), IMO they've just turned it into a rich mans club :(

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I'd far rather accept the regs and keep my money in a regulated and reputable UK listed business than some shady foreign outfit, but each to their own. 

 

Storm. Teacup.

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Fantastic firms elsewhere i,e Australasia - retail investors well looked after.

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UK is the only place to trade taxfree spreadbetting?

 

But others that trade CFDs can probably find something outside EU like Switzerland? or Austrailia?

 

Maybe IG can help those that want to move from "ESMA" to another country and still use IG

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There could well be other knock on effects. It seems likely ESMA will chase not only those just starting out with a small account straight into the laps of the unregulated offshore firms but also many with experience who are trying to build up their account, the decision looks short sighted and damaging to small retail and brokers alike.

 

Obviously brokers are now going to concentrate on their higher end clients, not only to make sure they keep those they already have but to try to poach from other firms and I wonder how that might impact the small retail trader. The negative account protection will increase costs but will apply only to retail not 'professionals'.

 

So small retail will be generating less revenue and higher costs at a time when IG need a plan to lure high end 'professionals'. I wonder what/who will be sacrificed?

For instance will they be lowering the SB minimum bet size, come July the current minimum in many markets will be higher than a maximum bet size on a small account. Or just introduce a new higher account minimum.

 

This ESMA decision will generate more change yet as it must cause a rethink of IG's business model.

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But if no retail taking the other side of the pro

 

IG need to hedge more in the real markets and thats more expensive?

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these new measure are very unfortunate for traders as they limit opportunities 

 

these new measure are very unfortunate for IG as they will make less profit

 

unfortunately these measure came around due to the nature of the business that IG and other ran 

 

effectively a ponzi scheme where they do everything to churn and burn customers and get new ones to keep they business going 

 

we are now even getting ads on tv with a company promoting that they put all orders into the market ! implying they know that other companies try to get customers to lose .. 

 

ig asking for help from customers .. is like a fox asking the chickens to tell the farmer the fox is ok .. 

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Anyone know of spreadbetting providers from Canada or Australia (where it is legal)?

 

I ultimately will need to make a decision between regulation and safety of deposits over maximising the return from my strategy.

 

Quickly searched for non EU domiciled spreadbetting companies but I'm struggling to find one. Seems like it could be a gold mine for someone to set up a non EU domiciled spreadbetting company that is regulated and run in a non pirate way!

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James, the FCA handbook rule say point 1 and 3 required... But IG are only using Point 2 for ascertaining qualification.. How come?

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 wrote:

James, the FCA handbook rule say point 1 and 3 required... But IG are only using Point 2 for ascertaining qualification.. How come?

Hey  - we comply with all points, however they are done at different times so it may not be as obvious. For example part 1 is completed on sign up, and if insufficient understanding of the financial markets comes across then we will perform additional appropriateness. Part 2 will be checked when a client specifically wants to upgrade, as is part 3. 

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There are a few points that in my opinion illustrate that all these decisions are done by people that have not used a CFD/Spreadbetting account themselves.

1st

500k to determine if someone is professional is a great measure, clearly someone with 450k has no clue about what he/she is doing

 

2nd

Now an account cannot lose more than deposited.
If those that wanted to not have any risk of losing more than deposited, they could have used garanteed stops.

For the extreme risk taker that amounts to:
Now your account is protected from losing more that you deposited, but you now are forced to lose 10x the amount than you ever wanted to risk, due to the fact that you now need 12k margin, where before you needed 1.2k. In case of a flashcrash worst case szenario you now lose the 12k not only the 1.2k.

 

There are a lot of CFD companies out there that are small and in countries like Cyprus where legislation and supervision is not the standart it might be in th UK or Germany.
Those companies force customers (which want to keep the same trading style and can afford it) do deposit huge amounts of money to their accounts.
I hope that the ESMA makes sure that all those funds are protected if/when one of those companies goes belly up.

 

Apart from that a 1200 Euro deposit turning into a 12000 Euro deposit due to increased margin might not be a problem by the amount of money itself, I would have prefered to keep the additional 10800 Euro in a long term stock market ETF earning money than at a CFD account where the only thing it does is giving a unpaid loan to the CFD broker.

How that is protecting me as a customer, I have still not figured out.

 

With the requested margin I guess a move to the futures markets directly makes more sense.
But maybe IG figures something out.

 

 

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It says 500k in stocks cash etc. What if the original 500k you have invested is currently below that due to open trades which are in a loss?

Would this classify as having 500k or does the overall balance with open trades need to be 500k or above?

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Retail customers leaving IG in huge numbers...no surprise there !

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Guest majco
On 1/22/2018 at 12:12 PM, db said:

Hi , as regards point number 1 in the screenshot posted above, with reference to having traded 10 times in each of the previous 4 quarters, what is the definition of 'significant size' in this case?

 

Thanks

You have to have traded 10 times with a minimum lot size of 0.50 lots per trade

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On 4/16/2018 at 8:53 AM, JamesIG said:

 


 wrote:

 

 

James, the FCA handbook rule say point 1 and 3 required... But IG are only using Point 2 for ascertaining qualification.. How come?

 

Hey  - we comply with all points, however they are done at different times so it may not be as obvious. For example part 1 is completed on sign up, and if insufficient understanding of the financial markets comes across then we will perform additional appropriateness. Part 2 will be checked when a client specifically wants to upgrade, as is part 3. 

@JamesIG if I understand correctly by your comment, point 1 (relevant knowledge and work experience) is only checked on signup, but I have just been on the phone with your support team and they said it does get checked during the application for pro status for existing clients. So what is the correct interpretation? 

Also, I have enough trading volume and I worked for more than 2 years as a developer for a large hedge fund in UK, in very close collaboration with traders, creating applications for trading execution and portfolio management that absolutely require financial knowledge of complex instruments, yet, had my application rejected on the grounds that "I was not a trader" as I was told on the phone when I called to find out why. This happened even though the FCA handbook clearly states a requirement for "financial knowledge" and it does not make any mention of "must be a trader".

So I am about to close my IG account which I've held for a few years now, and BTW I already am accepted as pro client in a few other respected spread betting companies in UK, so you might want to revisit the way you assess applications and make sure that team knows their job and the way to interpret FCA regulations. 

Shame cause I like IG, but hey, this is life, all the best to everybody reading this.

Edited by DaVinci

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Hi @DaVinci - yes, when you first sign up for an IG account you'll undergo appropriateness as described above. When you are looking at changing your account type, for example to a Professional account (the requirements of which have only been published in these last few months), then you may be asked to validate some information again. There could be months or years between signing up for an IG account originally and looking to change to this new ESMA professional status, hence further checks.

I also understand your point regarding working in the financial services industry on the developer side. As you stated there is a requirement to abide by the terms laid out by the regulators, however in many instances this is subjective. For example as found here (https://www.handbook.fca.org.uk/handbook/COBS/3/5.html - also below) you will notice point (1) puts the ownus on IG and contains subjectivity in the phrasing. Our legal and compliance team have drawn up a framework regarding this to see who should and shouldn't be rejected. In this instance basis your statement I will tag your original request with our compliance team for review to get a second opinion. 

Finally due to the subjective nature of the framework as laid out by the FCA I wouldn't be able to comment on other firms choices. The decision and framework we have come up with is what we believe to be right all things considered. 

1484952903_2018-07-2414_19_20-COBS3.5Professionalclients-FCAHandbook.png.f2a249f6365b0ab291f1de47f6cd8286.png

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