On 1st of August 2018, the European Securities and Markets Authority (ESMA) introduced industry-wide rules and restrictions designed to protect retail clients from the risks of trading with leverage. Saxo strongly supports these rules as a positive measure to guarantee greater investor protection. The below details do not apply to clients residing in Switzerland.
These measures include:
Retail clients
1. Leverage limits on the opening of a position by a retail client, which vary from 30:1 to 2:1 according to the volatility of the underlying instrument:
- 30:1 for major currency pairs;
- 20:1 for non-major currency pairs, gold and major indices;
- 10:1 for commodities other than gold and non-major equity indices;
- 5:1 for individual equities and other reference values;
- 2:1 for cryptocurrencies;
2. 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 Saxo is required to close out one or more of a retail client’s open CFDs;
3. Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses.
Professional clients
Industry-wide regulations have been introduced and are designed to protect less experienced traders. The above-mentioned rules do not apply to professional traders.