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Daily Financial Market News

Wed, 24 Jan 2018 08:00:00 GMT

Traders Urged to Respond to Proposed European Rule Changes

Traders Urged to Respond to Proposed European Rule Changes Search DailyFX Home Rates Charts News Market News Real-Time News Daily Briefings Forecast Market Alerts DailyFX Authors Articles Market News Headlines Traders Urged to Respond to Proposed European Rule Changes Euro May Shrug Off Soft PMI Data, Looking Ahead to ECB Meeting AUD/USD Rally Approaching Initial Resistance Targets Technical Analysis Analysis Technical Analyst Picks Support & Resistance Daily Technical Reports Pivot Points Sentiment Articles Algorithmic Trading Technical Analysis Headlines FTSE Technical Outlook – Consolidation Period Would Do Some Good Japanese Yen Technical Analysis: USD/JPY Wilts, 107 Could Beckon As Dollar Weakness Presists, Yen May Rally Calendars Economic Calendar Webinar Calendar Central Bank Rates Dividend Calendar Forex Economic Calendar Time Event Actual Forecast Rates Charts Education Education Beginner Intermediate Advanced Expert Free Trading Guides DAILYFX PLUS × Get the best parts of DailyFX.com in the new DailyFX App Download × Join Us For Our Free Webinars Get daily market analysis from our in-house experts Choose from more than 25 webinars each week Put your questions to our experts in real-time Q&As Register now Want to hold off on improving your trading? Click here to dismiss. × Get Your Free Trading Guides With your broad range of free expert guides, you'll explore: The basics of forex trading and how to develop your startegy Foundational knowledge to help you develop an edge in the market What's ahead for major FX pairs, Gold, Oil and more Download a Free Guide Want to hold off on improving your trading? Click here to dismiss. EUR/USD Low High View More Note: Low and High figures are for the trading day. News Euro May Shrug Off Soft PMI Data, Looking Ahead to ECB Meeting USD & JPY Get Haven Bids as Trump Protectionism Returns EUR/USD Boosted as German Economic Sentiment Soars GBP/USD Low High View More Note: Low and High figures are for the trading day. News Investor Sentiment Remains Buoyant as US Government Shutdown Ends USD & JPY Get Haven Bids as Trump Protectionism Returns A Weekly Technical Perspective on GBP/USD, USD/CAD, USD/CHF USD/JPY Low High View More Note: Low and High figures are for the trading day. 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News Bitcoin, Ethereum, Ripple; Technical Support Still Needed Bitcoin Shifts to a Mixed Trading Bias Bitcoin, Ethereum, Ripple Prices Crumble, Market Capitalization Slashed View More More Real-Time News Facebook Twitter Youtube Google + Traders Urged to Respond to Proposed European Rule Changes by  Martin Essex, MSTA , Analyst and Editor  and Luigi Guida Talking Point s: - ESMA has published a call for evidence on potential product intervention measures relating to the provision of CFDs , including rolling spot forex, and binary options to retail investors. - Companies offering the products are urging traders to reply during the consultation period. Traders in Europe are being urged to send their opinions to the European Securities and Markets Authority (ESMA) after the regulator published a call for evidence on potential product intervention measures on contracts for differences (CFDs) and binary options to retail investors. In a release issued on January 18 , ESMA said it was seeking evidence from stakeholders on the impact of five specific potential measures it is considering relating to CFDs us ing its power of product intervention granted by Article 40 of the MiFIR directive . These are: Leverage limits on the opening of a position by a retail client, A margin close out rule on a position by position basis, Negative balance protection on a per account basis, A restriction on the incentivisation of trading provided by CFD providers, and A standardised risk warning by CFD providers. ESMA is an independent authority that ha s been set up to safeguard of the stability of the European Union’ s financial system by enhancing the protection of investors and promoting stable and orderly financial markets. It reviews the risks that investors face, the financial frameworks they invest in and assess es market conditions to promote market fairness and customer protection. With the aim of creat ing a single law book in the EU, ESMA works closely with other European authorities to supervise the market and, being independent, is fully accountable to the European Parliament. As well as its proposals on CFDs generally, ESMA is also considering whether CFDs in cryptocurrencies such as Bitcoin should be addressed in the measures. As for binary options, the potential measure under consideration is a prohibition on the marketing, distribution or sale of these to retail investors. The submission period for responses will close at 2259 GMT on February 5. In its call for evidence, ESMA argues that “ t he inherent risk and complexity of these products, the marketing, distribution and sale through on-line channels and the associated aggressive marketing techniques used by a number of firms have led to significant investor protection concerns .” In response, some of the companies offering these products have given a broad welcome to the proposals using new powers that came into force on January 3 to address investor protection concerns about CFDs and binary options and are likely to culminate in new Europe-wide rules later this year. Peter Hetherington, chief executive of IG Group, the largest company in the industry and parent company of DailyFX, said: “ At IG we believe in strong regulation and have a history of regulatory compliance. Indeed, for a long while we've been stressing to regulators the need to have a strong compliant sector and stronger action against poor and illegal operators that taint our industry. “ So we share the concerns stated by the regulator and in many ways we're ahead of regulation on all their points for concern. The introduction of limited risk accounts is a good example of that. ” However, concerns have been raised about some of the proposed measures, including the recommended margin close out rule on a position by position basis. This would standardise the percentage of margin at which providers are required to close out a retail client’s open CFD . The argument against this proposal is that any effort to force brokers to close single positions in clients’ accounts after they lose a specific amount , regardless as to the standing of their entire account or whether it is the leg of a more complicated strategy, could be detrimental. If, for example, a trader has a long position in the Dow Jones Average and a short position in Germany’s DAX , he or she will risk having one position closed out if losses on that position reach a certain point, even if the trader is in profit on the overall strategy . In a statement issued with IG’s half-year results, Hetherington said: “ IG supports the objective of regulators to improve retail client outcomes in the industry. The Company’s long held view is that the most effective measure to improve client outcomes is to ensure that the product is only marketed to the right people in the right way. The current ESMA proposals might not achieve this. The disproportionate focus on leverage has caused consternation amongst our large number of retail clients, many of whom have traded for years and wish to continue using our product as they do today. ” Traders who would like to share their opinions and views on the ESMA proposals are urged to answer the question the regulator is asking retail investors: “What impact do you consider that the envisaged measures would have on retail investors.” All contributions should be submitted online on the ESMA website directly, using its Response Form . --- Written by Martin Essex, Analyst and Editor , and Luigi Guida, Market Analyst To contact Martin, email him at martin.essex@ig.com Follow Martin on Twitter @MartinSEssex To contact Luigi, email him at luigi.guida@ig.com Follow Luigi on Twitter @guida_DFX DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. 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