With the global popularity of online trading growing exponentially in the last 2 years, it is no surprise to see economic regulations being introduced to protect the customer. The European Securities and Market Authority (ESMA) is responsible for regulating binary options and CFD trading in the European Union. In 2018, ESMA updated the legislation for regulating binary options and CFD trading, a move which has attracted widespread criticism from the community. The imposition of ESMA’s new regulations includes the change in leverage on all major CFDs and FX pairs, now at 30:1. Minor currency pairs and gold is now tradable only at 20: 1 while minor indices and other commodities can be traded with a 10:1 leverage. This has affected how online brokerage services do business, as well as the trading options they offer.
ESMA Rules Explained in Brief:
As of 27th March 2018, ESMA introduced new measures designed to restrict CFDs as well as outlawing binary options in all areas of the EU for retail investors, which now also includes U.K. The changes were introduced mainly to provide more security to retail investors. The effects took place from 2nd July 2018 for Binary Options and from 1st August 2018.Continue Reading