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ESMA and opposing positions in the same instrument

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Hi guys,

Trying to get my head round the fact that ESMA only applies to new positions. I sometimes have a long term view - say short FTSE - that I cover temporarily with an opposing countertrend position. I know it's a messy way of trading, but I'm used to it and it works for me. So suppose on 1st August I'm holding both long and short, and then subsequently close one half. The remaining half will still be an old position and so shouldn't attract the new margin requirement.

But I'm worried it may - because if it didn't I could take out 20 longs and 20 shorts all at the same level at the end of July and close them one by one over the months, so that I was continuing to trade at the old margin levels. I'm not planning to do that, but worried that IG may need to prevent people doing it by treating hedged positions differently from the way they do now. Just trying to anticipate any bombshells I may wake up to on 1st August. :( Did I mention I hate ESMA?



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Hi Cate

I'm pretty sure you could do that no problem as the new margin requirements only apply to new positions. Of course, if any of your positions needed to rollover, that would be the equivalent of opening a new position and so any rollover would be affected with the new margin requirement.

Don't take my word for it though!

Good luck


P.S. I hate ESMA too!

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