What is ESMA and how ESMA has impacted your trading account?

ESMA (the European Securities and Markets Authority) has introduced a series of regulations and restrictions aimed at protecting retail clients when trading CFDs. The restrictions and measures adopted by ESMA include leverage limits (see below for more details), negative balance protection, and a margin closeout rule on a per-account basis (at 50% of minimum required margin). The measures formally enforced on 1st August 2018 were introduced as being temporary, but they are still in place today.

As a regulated investment firm, EuroFinance complies with all rules, regulations and recommendations of ESMA and the Financial Supervision Commission (the Bulgarian financial regulatory authority).

According to ESMA guidelines, the leverage for retail trading accounts can vary between 2:1 (50%) and 30:1 (3.33%) depending on the specific underlying financial instrument.

The applicable leverage limits are as follows:

  • 30:1 (3.33%) for major currency pairs like EUR/USD, GBP/USD, USD/JPY, etc.
  • 20:1 (5.00%) for non-major currency pairs (like EUR/NZD, AUD/USD, etc.), gold and major indices
  • 10:1 (10%) for commodities other than gold and non-major equity indices
  • 5:1 (20%) for individual equities and other reference values
  • 2:1 (50%) for cryptocurrencies