What does ESMA's new regulations hold in store for retail traders?
ESMA has recently rolled out CFD regulations with an August 1st deadline. The most extreme measure was a complete prohibition of binary options and heavy restriction of maximum leverage available to retail CFD traders.
Some sources say many brokers are looking to move operations offshore, far away from the strict gaze and scorns (and fines) of EU regulators. Which opens up a completely different can of worms. Now all of these non-compliant, non-regulated brokers will go completely Mad Max i.e. lawless and opportunistic.
This may seem like unnecessary doom and gloom but the reality is the financial service industry has experienced this before. Before CySEC regulated binary options, many of these brokers engaged in less than savory or professional behavior. These predatory actions included being misleading regarding the risk involved to flat out denying customers the ability to withdraw profits. Luckily, once CySEC started licensing and regulating more credible binary brokers the landscape cleaned up relatively quickly.
Again, this sets up a situation which exposes EU traders to unregulated brokers - so maybe the regulations, that are presented as protecting EU clients cause the inverse effect. Luckily there are brokers which support the regulations and will not take these types of measures to avoid regulatory supervision.
On the other side of the coin, well established brokers will likely remain within their current licensed domicile and adapt to the new regulations. These types of brokers ultimately welcome the ESMA regulations because they seek to protect traders from various predatory practices and exposure to unnecessary risk.
easyMarkets not only welcomed the new regulations, but also adapted to them by creating an alternative to the now highly regulated CFD trading - adding even further benefits to the client.
They created a new trading product which allows traders to still use significant leverage when trading (the biggest hang up most people had when talking about the ESMA regulations), without margin requirements and zero spreads.
This new product, easyTrade, also simplifies trading which makes it friendly to new traders and allows experienced traders to act immediately when market conditions change unexpectedly. Another benefit easyTrade offers experienced traders is the ability to use this innovative product as a hedge.
The stand out feature of easyTrade though is that it doesn't cap a trade's potential (unlike binary options that have predefined payouts) - but it caps risk. This product allows traders to set the maximum risk they are comfortable with before they place their trade.
No matter what
happens when the new regulations kick in - one thing is sure, it will help
protect traders and their invested capital. Who would not want to get behind that?
- This is a press release provided by easyMarkets.com
