How does ESMA affect the leverage and trading conditions of CFD?

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ESMA CFD regulation introduces maximum leverage caps, based on the volatility of the given instrument.

• 30:1 for major currency pairs such as EURUSD, GBPUSD, AUDUSD
• 20:1 for non-major currency pairs, gold and major indices such as EURPLN, USDRUB, US500
• 10:1 for commodities, non-major equity indices such as Silver, Oil, Czech Stock Index
• 5:1 for individual equities such as Google, Apple, BMW
• 2:1 for cryptocurrencies such as Bitcoin, Ethereum, Ripple

Currently, most online brokers allow trades 100, 200, or even 1000 times the amount available as trading capital. Furthermore, such leverage settings can be set as default.

With the new CFD regulation, traders will have to place at least 3.3% of their capital as a margin deposit in case of major FX pairs and even more for other instruments. This means that a typical mini lot position (0.1 lot = 10.000 USD value for an fx pair) will be required to have at least 333 USD on the account.

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