Saxo Bank welcomes ESMA margin trading measures
29 March 2018 Copenhagen
Image: Shutterstock
Saxo Bank has welcomed the European Securities and Markets Authority’s (ESMAs) recently announced measures in relation to the provision of contracts for difference (CFDs) to retail clients.
The measures referred to include caps on leverage, which Saxo Bank said it considers fair and proportionate.
Saxo Bank added that it expects these measures to be positive for clients and result in a more level playing field among EU providers offering margin trading.
This will, in turn, move the competitive focus away from leverage and towards the quality of platform, price, product and service.
Saxo noted that CFDs and foreign exchange instruments have a number of uses for traders, such as allowing them to trade the full global macrocycle and hedge their market exposure in a flexible and efficient way.
However, with excessive leverage, the risks of trading these products can outweigh the benefits.
Saxo Bank said: “It is important to note that this is a leverage problem—not a product problem. Responsible caps on leverage are therefore key to consumer protection.”
Kim Fournais, founder and CEO, Saxo Bank, said: “Saxo […] believes that consistent, harmonised regulation at a European level will be positive for clients and the industry as a whole. ESMA is creating better alignment between leverage levels and market conditions which is very important and we find the proposed caps on leverage fair and proportionate.”
“Some argue that more prudent consumer protection will lead to increased activity from unlicensed providers from outside the EU. Such activities should be the remit of the police and relevant authorities. This is, however, an entirely separate issue and not in, our opinion, a valid argument against firm and fair regulation.”
The measures referred to include caps on leverage, which Saxo Bank said it considers fair and proportionate.
Saxo Bank added that it expects these measures to be positive for clients and result in a more level playing field among EU providers offering margin trading.
This will, in turn, move the competitive focus away from leverage and towards the quality of platform, price, product and service.
Saxo noted that CFDs and foreign exchange instruments have a number of uses for traders, such as allowing them to trade the full global macrocycle and hedge their market exposure in a flexible and efficient way.
However, with excessive leverage, the risks of trading these products can outweigh the benefits.
Saxo Bank said: “It is important to note that this is a leverage problem—not a product problem. Responsible caps on leverage are therefore key to consumer protection.”
Kim Fournais, founder and CEO, Saxo Bank, said: “Saxo […] believes that consistent, harmonised regulation at a European level will be positive for clients and the industry as a whole. ESMA is creating better alignment between leverage levels and market conditions which is very important and we find the proposed caps on leverage fair and proportionate.”
“Some argue that more prudent consumer protection will lead to increased activity from unlicensed providers from outside the EU. Such activities should be the remit of the police and relevant authorities. This is, however, an entirely separate issue and not in, our opinion, a valid argument against firm and fair regulation.”
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