Meanwhile, European regulators are progressing in their work on making ESMA regulations permanent.
In the history of the contracts for differences (CFDs) retail market in Europe, August 1, 2018, will be remembered as an important date. On that fateful day, the ‘temporary’ product intervention of the European Securities and Markets Authority (ESMA) came into effect.
Since then, the maximum Leverage for retail clients cannot be higher than the maximum of 30:1. After focusing its efforts on retail clients profitability, the pan-European regulator is about to leave matters into the hands of national authorities.
Although no one expects the European regulator to suddenly abandon its product intervention powers, individual European Union member states are preparing permanent measures that are determined by the national regulators. While every country's watchdog can implement different rules or is simply planning to make the ESMA's measures permanent, the general rules that are governing the market at a European level are likely to remain intact in the coming years.
Finance Magnates decided to take a closer look at current trends among European regulators and the progress in their work on making ESMA regulations permanent in the newest Quarterly Industry Report. You can find the sneak peek of one of the key findings from the ESMA's measures effects below.
Profitability is Rising, as Traders Flee Offshore
European brokers are not required to report and publish accurate statistics on their clients' FX trading performance. However, aggregated statistics from the Polish market provide an estimation of the conditions on an EU-wide level. The data show that since the implementation of ESMA's product intervention measures, the average level of profitability of retail investors has increased noticeably.
In 2018, approximately 40 percent of Polish traders made a profit on the Forex market. With Q1 2019, this value reached a record level of 48 percent. In Q2 2018 (before the product intervention measures came into force) it was lower by ten percentage points.
Assuming that traders from other European countries are also performing in a similar way, the results mentioned above are certainly encouraging. That said, another trend in the industry is pointing to a different, more worrisome development stemming from ESMA's measures.
The product intervention allegedly forced an outflow among investors who are risk-hungry to offshore-based brokers outside the European Union. Australia, among others, turns out to be one of the most popular destinations.
The self-regulatory organization in Poland, the Chamber of Brokerage Houses, polled traders to see what impact the intervention had on their trading. According to the survey’s results, half of the respondents contemplated moving their trading accounts outside the EU.
According to Marek Wołos from the Chamber of Brokerage Houses, “ESMA rules have contributed to the migration of investors to countries outside the EU. The more active investor who is aware and experienced, accepting the increased risk in exchange for the opportunity to make high returns, moves. Such clients are unable to calibrate their strategies to the requirements imposed by the ESMA.”
National Regulators
According to several industry experts interviewed by Finance Magnates, the ESMA will cease to extend the product intervention measures this year, 12 months after it implemented those. This is causing an increasing number of national regulators to propose their own permanent changes. They are set to implement them within the next few months.
To get the full article and the bigger-picture perspective on the post ESMA reaction of FX/CFD industry, get our latest Quarterly Industry Report.
In the history of the contracts for differences (CFDs) retail market in Europe, August 1, 2018, will be remembered as an important date. On that fateful day, the ‘temporary’ product intervention of the European Securities and Markets Authority (ESMA) came into effect.
Since then, the maximum Leverage for retail clients cannot be higher than the maximum of 30:1. After focusing its efforts on retail clients profitability, the pan-European regulator is about to leave matters into the hands of national authorities.
Although no one expects the European regulator to suddenly abandon its product intervention powers, individual European Union member states are preparing permanent measures that are determined by the national regulators. While every country's watchdog can implement different rules or is simply planning to make the ESMA's measures permanent, the general rules that are governing the market at a European level are likely to remain intact in the coming years.
Finance Magnates decided to take a closer look at current trends among European regulators and the progress in their work on making ESMA regulations permanent in the newest Quarterly Industry Report. You can find the sneak peek of one of the key findings from the ESMA's measures effects below.
Profitability is Rising, as Traders Flee Offshore
European brokers are not required to report and publish accurate statistics on their clients' FX trading performance. However, aggregated statistics from the Polish market provide an estimation of the conditions on an EU-wide level. The data show that since the implementation of ESMA's product intervention measures, the average level of profitability of retail investors has increased noticeably.
In 2018, approximately 40 percent of Polish traders made a profit on the Forex market. With Q1 2019, this value reached a record level of 48 percent. In Q2 2018 (before the product intervention measures came into force) it was lower by ten percentage points.
Assuming that traders from other European countries are also performing in a similar way, the results mentioned above are certainly encouraging. That said, another trend in the industry is pointing to a different, more worrisome development stemming from ESMA's measures.
The product intervention allegedly forced an outflow among investors who are risk-hungry to offshore-based brokers outside the European Union. Australia, among others, turns out to be one of the most popular destinations.
The self-regulatory organization in Poland, the Chamber of Brokerage Houses, polled traders to see what impact the intervention had on their trading. According to the survey’s results, half of the respondents contemplated moving their trading accounts outside the EU.
According to Marek Wołos from the Chamber of Brokerage Houses, “ESMA rules have contributed to the migration of investors to countries outside the EU. The more active investor who is aware and experienced, accepting the increased risk in exchange for the opportunity to make high returns, moves. Such clients are unable to calibrate their strategies to the requirements imposed by the ESMA.”
National Regulators
According to several industry experts interviewed by Finance Magnates, the ESMA will cease to extend the product intervention measures this year, 12 months after it implemented those. This is causing an increasing number of national regulators to propose their own permanent changes. They are set to implement them within the next few months.
To get the full article and the bigger-picture perspective on the post ESMA reaction of FX/CFD industry, get our latest Quarterly Industry Report.
A graduate of the Warsaw School of Economics, Sylwester received an MA specializing in finance and banking. As Finance Magnates' research associate and STA certified analyst, he leaves no stone unturned. Sylwester is the previous minority partner of an NFA registered US forex broker, and since 2003, has participated in many forex projects.
Interactive Brokers Expands Offerings with Daily Options on French Stocks
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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