The Side Effects of the ESMA Margin Changes

We are already into the start of Autumn and with all of the Institutional desks back to being fully manned, the summer of irrational moves on thin volumes is over for another year. Business is seemingly back to normal, but perhaps not so for the Retail broker.

The ESMA regulation changes this summer have left the retail trader with little choice but to find new homes and where there were a couple of hundred firms who were almost impossible to choose between there are now very few that suit the current trader. These changes were touted as creating increased safety for retail clients, most of which have not welcomed the change. The results so far are that rather than trade less, make less and feel safer they have had to trade more to cover the shortfall in margin or just deposit that which they weren’t previously willing. After trying to work this way many have ended up leaving their broker and this will make for interesting reading on the
3 rd quarter and full year results for many of these firms be they big or small.

A consolidation industry wide, is now certainly a possibility for these brokers who will need to pool resources between them to survive. Any consolidation though, does not fix the core issue of the margin changes so they will likely have to change their business model and make a big push towards professional traders only, ignoring the retail traders going forward.

The Australian may brokers have benefitted from being in a non ESMA jurisdiction and seen an increase in clients but it is widely thought that they will soon follow suit and change their margins to match the ESMA guidelines due to the close ties of the Australian regulator ASIC and the FCA.

So an industry wide shake up is under way, with ESMA recently renewing their margin restrictions, as was widely expected and more clients being squeezed out of trading in the UK and Europe looking for alternative, safe and well-respected broker who isn’t hampered by these regulation changes.

When investigating the options, with all of the above in mind, it seems they are few and far between.

Tradeview fits the bill with its 14 year history and continued growth in reputation and international coverage, offering segregated client funds, margins that traders are still searching for and all of the products and instruments you would expect of a top broker. They are one of the best options for those Introducing Brokers also looking for a new home for their clients and they give some extremely competitive pricing.

Related: The ESMA and Its New Regulations
Related: Introducing Brokers: Introducing Brokers: Where to go after ESMA

If a client needed any further convincing, then here is a comparison table between the best leverage that ESMA allows and that by which Tradeview can still offer:

The Side Effects of the ESMA Margin Changes

I will let that sink in and should you wish to find out more then please feel free to contact me at asaward@tvmarkets.com, connect with me on LinkedIn or simply open an account here.

Be sure to look out for my next article on the Finance Magnates London Summit 2018 that we will be attending and if you wish to book a meeting with me there to discuss how we can help you or your business then please feel free to get in contact.

Adam Saward

 

Adam Saward
Head of UK Business Development
asaward@tvmarkets.com