LEVERAGE & OTHER CFD PRODUCTS CHANGES

Effective from 1st Aug 2018

(“ESMA Measures”)

The regulatory landscape is changing; European regulator (ESMA) announced CFD products’ measures which will come in to the effect from 1^st August 2018. ESMA’s official decision about the product restriction measure could be found in different languages via ESMA website here.

This page provides a brief summary of ESMA Measures, FAQ, professional and retail clients terms comparison and pros and cons should you apply and qualify to be a professional client including protections you may lose.

How will Clients be affected?

TeraFX has permissions to accept three types of clients: retail, professional and eligible counterparties. On your application to open an account with TeraFX you are classified appropriately as per our Classification Policy. Professional client or TeraFX Pro Account has the same meaning for the purpose of this notice.

Retail Clients of TeraFX will be impacted by ESMA measures. CFDs leverage restrictions to be imposed on new opened positions on or after 1^st August 2018 won’t apply to professional traders (see also table below).

There are other ESMA measures except leverage, which affect retail clients such as 50% margin close out rule on an account level basis, negative balance protection on an account level basis and restriction on the incentives (no monetary and non-monetary benefits).

Remember we will always inform you separately about protections you may lose should you apply and qualify to be professional client. Please read the criteria to qualify to ascertain whether you would like to apply become a Professional Client.

AM I ELIGIBLE FOR A TeraFX Pro ACCOUNT?

To be eligible for a TeraFX Pro account, you need to meet the professional client eligibility criteria. If you answer yes to two of these three questions, you could be eligible for a Pro account.

Eligibility criteria

• Have you placed 10 relevant trades of a significant size per quarter in the last year? 
• Does your financial instrument portfolio exceed €500,000 or currency equivalent?
• Do you, or have you, worked in the financial sector requiring knowledge of the CFD transactions for at least 1+ year(s)?

View qualification criteria in detail

Margin Requirement Examples

The table below shows you how the new leverage limits will affect the margin required to open a position after 1st of Aug 2018:

Key ESMA changes for Retail Clients

What will happen to my account after 1^st of August 2018

Positions opened before 1st August 2018 (retail client)

In order to act in the best interest of its clients, TeraFX will maintain existing positions of its retail clients opened before the 1st of August 2018 on current leverage until such positions are closed by each respective client (“Existing positions”). Retail clients’ positions opened on or after the 1st of August 2018 will be opened with new leverage levels in compliance with the Measures (“New positions”). In addition, TeraFX will maintain stop out levels as they are currently for Existing positions; for New positions, TeraFX will set a stop out level at 50%.

Existing positions will be close-only starting from 1 Aug, implying that clients will only be able to close their existing positions but will not be able to open new positions with the existing symbols.

Positions after 1st of August 2018 (retail client)

New symbols will be defined in the system. Starting from 1 Aug, all new positions will be traded with new symbols. We will add “!” to each symbol to indicate it is a new symbol in compliance with new ESMA leverages (such as EURUSD symbol will be EURUSD!).

There could be slight changes to mark ups as security groups will change along with new symbols and new leverages. Clients are encouraged to email customer services to learn their new mark ups based on new security groups, compared to old mark ups.

A new account will be opened for you if you are active client (have positions opened). New symbols and leverages will be defined into new accounts. We will share account login information at the end of July. Clients will be able to maintain and close their positions opened before 1 Aug in their old accounts and will be able to open new positions with new symbols after 1 Aug in their new accounts.

All inactive accounts (accounts with no open positions) will be changed to read-only as of 31 July 2018.

If your account was inactive (no open trade) but after 1^st August 2018 you wish to trade with new leverages and new symbols we encourage you to send an email to customerservices@terafx.co.uk to initiate and speed up the process.

Leverage Levels after 1st August 2018 (retail clients):

Other Terms after 1st of August 2018 (retail clients):

1. A margin close out rule on a per account basis. This will standardise the percentage of margin (at 50% of minimum required margin) at which providers are required to close out one or more retail client’s open CFDs;
2. Negative balance protection on a per account basis. This will provide an overall guaranteed limit on retail client losses. This means that retail client account balance will never be allowed to go below zero, regardless of market conditions.
3. A restriction on the incentives offered to trade CFDs.

Positions after 1st of August 2018 (professional clients)

All existing symbols will be close-only starting from 1 Aug, implying that clients will only be able to close their existing positions but will not be able to open new positions with the existing symbols

New symbols will be defined in the system. Starting from 1 Aug, all new positions will be traded with new symbols. We will add “!” to each symbol to indicate it is a new symbol (such as EURUSD symbol will be EURUSD!).

There could be slight changes to mark ups as security groups will change along with new symbols and new leverages. Clients are encouraged to email customer services to learn their new mark ups based on new security groups, compared to old mark ups.

FAQ