Great Britain introduces 1 leverage: 30 permanently

British financial supervision, FCA, he announced the introduction of ESMA's product intervention on a permanent basis at the national level. This is related to the limitation in the marketing and distribution of CFD instruments and of course the reduction of leverage to the 1: 30.

Be sure to read: Change in the amount of leverage - Summary of dates and offers

Forex in the UK with lever 1: 30

W official communication of the British regulator we read:

"The law deals with the harm caused to retail consumers by introducing temporary restrictions proposed by ESMA to enter into exchange rate differences (CFDs) that are sold to retail customers permanently.".

This decision should come as no surprise to anyone. Already in December 2018, it was said that the FCA wanted to introduce permanent regulations implemented "temporarily" by the European regulator. Only the most optimistic people who hoped that the public consultations (which had just ended) would change something could have a shadow of hope. However, this did not happen.

With the entry into force of the new regulations, British brokers and brokerage houses will be obliged to:

• leverage limitations up to a maximum of 1:30 - 1: 2 (depending on the instrument class)
• implement the Stop-Out mechanism at 50% security deposit level,
• introduce protection against the creation of a negative balance on the client's account,
• stop the promotion and cash and non-cash incentives to open investment accounts,
• apply uniform, standardized risk information with information about the percentage of retail accounts that have achieved a loss.

What is new is the inclusion of instruments in the form of options similar to CFDs. This is to be a form of protection against attempts to circumvent the bans by broker companies offering alternative products to their clients. According to FCA, this group of instruments is as risky as contracts for exchange rate differences. Organizations operating outside of Great Britain, selling instruments only through a British intermediary will be excluded from the restrictions.

Christopher Woolard, Executive Director Strategy and Competition at FCA:

"Our intervention results from evidence of aggressive introduction by companies into the general trading of CFDs, which means that retail consumers buy a product that is not suitable for them. We have seen companies offering CFDs with increasing financial leverage, which has resulted in high interest rates for consumers losing money. EU regulations are temporary. The new rules maintain and strengthen consumer protection. "

Changes, which in this case are mainly just a formality, enter into force on 1 August 2019 in relation to CFD instruments. In the case of instruments from the category of options similar to CFD, the intervention will have its application in practice from 1 September 2019.