On Monday, 30 July 2018, many retail investors awoke to startling news that their trading accounts had insufficient capital; they were in a margin call. In the run-up, most brokers relied on sending their clients a template email, leaving them in the dark and thus needing urgent help to continue trading. Accendo Markets’ clients, however, knew well in advance that this was coming and exactly how much extra would be required to keep their positions open.
The goal of this report is to help those investors who were wrong-footed by the new regulations and to inform them of their options and alternatives.
As of 30 July, the leverage available to retail investors has been limited to between 2:1 and 30:1, depending on the underlying product being traded. In the case of shares, these now all require a 20% initial deposit, equating to leverage of 5:1. The change is a result of new regulations from ESMA (European Securities and Markets Authority), designed to protect individuals from over-leveraging themselves and losing more than they can afford.
It is a positive change that Accendo Markets supports in terms of both ensuring responsible trading and client relationship longevity. Keep in mind that these restrictions do not apply if you meet the criteria for Professional Status (click here).