How the ESMA amendments are going to be applied

Application of new amendments is coming, and therefore, we have decided to inform our clients in advance how and when such amendments are going to apply and what to pay attention to. Good news is that large portion of these new measures have already been met by us even before ESMA. Therefore, these new amendments should not impact our clients markedly. In the section below, you can read what to pay attention to and when the new regulation is going to apply. 

Important information related to the ESMA application:

  • Restrictions introduced by ESMA will come into force on August 1, 2018Purple Trading will apply them already during the weekend, on July 27, 2018, while after this date, there won’t be any changes to the leverage in PurpleZone possible 
  • Ahead of July 27, 2018, clients should check, if they have sufficient free margin on their trading account, so they could cover potential change of leverage (if the clients miss sufficient free margin on their trading account after the implementation of new leverage, open positions will be closed) 
  • Limitation of leverage shall not be applicable to the clients having the status of a professional client 
  • Brokers must meet the requirements for negative balance protection and Margin close out rule on per account basis – Purple Trading meet both 
  • In case of strategy providers, the professional client status does not relate to PAMM accounts, but only to the SLF account

Furthermore, here you can find the table where there is the maximum leverage provided, specified for respective instruments after the amendment is applied.

What are these ESMA amendments related to?

At the end of March, ESMA authority has released a statement where it has reported all measures related to CFDs. It’s not clear by now, how long these ESMA measures are about to be valid. At this moment, they are planned only for 3 months, but the period of them remaining in force and effect may be prolonged later. Good news for the clients is the fact that considerable portion of these measures are already met by Purple-Trading before this statement, so the amendments should not be that dramatic as it could seem. The top amendment, having impact on traders, will be the leverage reduction for trading instruments in a range of 1:2 to 1:30 (the leverage ratio provided depends on the volatility of underlying asset).

If you’re still not sure about the leverage you actually use, don’t hesitate to contact our Support team.

However, there is one great offer at the end for traders:

If you meet two from three set requirements, you can request to be re-categorised to a professional client. More information about gaining the professional client state can be found here.

Your capital is at risk.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.60 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.