FCA: thanks to the introduced regulations, traders will save almost 500 million pounds a year

Market restrictions CFD initiated by ESMA in the form of reducing leverage and standardizing the rules for automatic closing of positions (stop-out mechanism) that cause a loss of 50 percent. capital turned out for good to individual investors - he argues British Financial Supervision Authority (FCA). According to the regulator, during one quarter of last year investors' losses were reduced by GBP 77 million. Annual estimates show even better results.

Data comes from the published report on the FCA website. He focused on summarizing the impact of changes that have been made in recent months. They were aimed at protecting individual investors against excessive losses. Because the fact that inexperienced and often not very thoroughly educated in the meanders of speculative tricks investors are "Donors of capital" for players experienced and possessing large financial resources, it is after all widely known. Statistics of individual brokers are regularly published, on the basis of which a simple conclusion can be drawn: most individual investors lose on the Forex market, and do not earn.

FCA: the risk is still high

The FCA writes in a report that the CFD market is still very risky for inexperienced investors, but the introduced changes have saved them from larger losses. What are these changes? The first concerned restrictions on the introduction of financial instruments to the market and the method of selling them. This applies primarily to reducing leverage. Earlier the leverage to increase the position relative to the invested capital was 30: 1, now it is only 2: 1.

The second, equally important change is the requirement to automatically close the position of each client when his loss reaches half of the margin securing the investment account - previously, each broker could set this threshold at a level of his choice (often at 5% margin level).

Be sure to read: Great Britain has introduced leverage 1:30 permanently

How much did investors save?

The report reads that before the changes were made, 800 people were registered in Great Britain. active accounts, and their accounts had over 1,5 billion. GBP. Retail customers quickly squandered their possessions. According to FCA, they lost over GBP 2018 billion in 1,07. The changes were to be immediately visible in customer accounts. From August to October 2018, losses for UK retail brokers decreased by GBP 77 million. The data relate to only one quarter, and officials are convinced that the result will be even more spectacular on an annual basis. The British say that thanks to the changes, GBP 267-451 million a year will remain in the portfolios of individual investors.

Professional customer status will not pay off everyone

Some investors are still trying to evade new regulations. First of all, to use greater financial leverage, which will increase the chances of definitely higher earnings. Of course, it also increases the risk of potential losses, but hardly anyone assumes it.

Some companies allow customers to take this step, offering them the status of so-called professional customer. What is this about? Most often, several conditions must be met. Prove professional experience in an investing position in recent years, show an account on which larger amounts were invested in the last year and / or have adequate capital. In Poland it is even simpler, thanks to the status of an experienced customer, where one of the conditions is to undergo 50 hours of training and pass an appropriate knowledge test.

Check it out: Sample questions in the test for an experienced investor

Some of the companies have branches or capital ties in other countries where such strict restrictions do not apply. And many people take advantage of it (and this puts a question mark over the objectivity of the statistics published by FCA), which - according to FCA - is not good for them. Like tying up with lesser-known companies that resort to various tricks, promising customers golden mountains. They are also often the cause of financial problems, and often eventually disappear on their own, leaving investors unable to recover funds deposited into their accounts.

"Sector Views clearly shows that many of the damage we see is caused by a significant number of smaller companies that we regulate or companies that go beyond our competence." - emphasizes Christopher Woolard, executive director of strategy and competition at FCA.