Alfa-Forex, an online trading provider of foreign exchange (forex), announced on Wednesday that, it would no longer be offering its services to individual clients and other users which are categorized as “retail” under MiFID, from the end of June 2019.
Alfa-Forex is the trading name and brand of Alfa Capital Holdings (Cyprus) Limited (Alfa Capital). According to the statement, the news is driven by Alfa Capital’s decision to focus on its institutional business.
Specifically, Alfa Capital has made the strategic decision to focus on providing “premium trading services” on forex and related products to institutional market participants through its existing trading platforms.
“All other business lines and products of Alfa Capital Holdings (Cyprus) Limited are not affected by the decision relating to the brand Alfa-Forex. Affected clients will be contacted in due course,” the statement from the company on Wednesday said.
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ESMA Regulations Hurt Retail FX Brokers
Alfa-Forex’s announcement comes at a time when the regulatory environment for retail trading providers is becoming increasingly difficult. As Finance Magnates has reported extensively, in the European Union, financial regulator ESMA (European Securities and Markets Authority) implemented a suite of restrictions for retail trading products.
For contracts for differences (CFDs) on major FX pairs, a leverage cap of 30:1 is now in force for retail clients. Indices, non-major currency pairs, and gold have leverage restriction of 20:1, while other commodities and non-major indices can be provided with a 10:1 gearing. Furthermore, the restrictions also prohibit certain sales and marketing practices.
Although the new regulations from ESMA are only temporary, the regulator continues to renew the restrictions and can do so for as long as it sees fit. Only yesterday, the European watchdog announced that it was renewing its product intervention measures for CFDs.
As Finance Magnates outlined, this new renewal will go live at the beginning of May, taking us through to the end of August this year. This means that the product intervention measures have been in place for twelve months.