New AUD/JPY margin after ESMA

[cate]

Hi,

I'm going down the list IG sent out of new margin rates. I see the definition of Major FX is "currency pairs containing any two of the following: USD, EUR, JPY, GBP, CAD, CHF". These have a current margin rate of 0.5%. According to the IG email everything else is Minor FX and has a present margin rate of 1%. So by this definition AUD/JPY should be a Minor pair. But currently on the platform AUD/JPY has a 0.5% margin requirement.

So the question is will it go to 3.33% like a major pair, or to 5% like a minor pair this weekend?

I'm just editing this to add the next thing I got to! The email says Shares will go from 7.5% to 20%. But my current Barclays positions are shown at 5%. Are all shares going to 20% irrespective of what they are now?

Happy ESMA -5 day to everyone.

Cate 

Edited July 23, 2018 by cate

[JamesIG]

Hi @cate - Please note these changes only affect retail clients of EU firms (that are subject to ESMA regulation), and do not apply to professional clients.

ESMA have not considered AUD as a major currency, the ESMA majors are USD, EUR, JPY, GBP, CAD AND CHF. There are a few differences between the official ESMA definition of majors and what we currently have on the platform, however we are looking to review this. The email is therefore correct and AUD crosses will be at 5%. 

When the email was sent the floor was 7.5% for shares, however we had to take that away (reverting back to the 5%), before we go live with the ESMA minimum. The minimum will be 20% as laid out in the email. 

In regards to other FX, margin requirements have changed slightly from when the email was sent, however the proposed margin percentages as laid out in that email are correct for the proposed dates (as below).

Apologies for any confusion. 

[cate]

The more I look at all this the more confusing it is. I've been using the "info" tab on the platform to check what the current leverage is, but it can't be right. CAD/JPY claims to require .75% and EUR/JPY claims to need .5% but actually a mini contract in each requires about £44 - they aren't different.

Oh and NZDUSD and NZDJPY are also different from what the emails says they are - both currently require 0.75% but they are minor pairs and so according to the email should be at 1% at the moment.

I'm baffled...

 

[Caseynotes]

Don't worry @cate, by this time next week all these problems today will seem like the good times. #ESMA countdown. 

[cate]

@Caseynotes I have a horrible feeling you're right. Thanks for the cheering thought!  

Thanks for the clarification @JamesIG. One last question. When you say shares will all go to 20%, what happens to the more exotic ones that are already higher than that? Do they stay as they are, or will they increase even more? For example I have some Petropavlovsk and they are currently 25%.

Thanks!

Cate

[PandaFace]

I can imagine they’ll stay at 25 for a bit until things have calmed down, then best case scenario is IG lower the margin requirements on those stock to free up some client margin. May work as their risk (which as a company I would guess they deal in) net would be down. Maybe the review on a stock by stock basis tho. 

[JamesIG]

Hi @cate - yes PandaFace was right to some extent in that higher margined shares at the moment - i.e. ones which may be margined at say 25%, will remain at that level. 

We will look to do a periodic review, as we have always done, a little later and see what if any changes are required. As with all changes we will look to give you as much notice as possible. 

Although we do manage risk on a net exposure level, we also do look at individual shares on a one on one basis, and therefore if there are still substantial risks with the stock or high volatility, low liquidity, or anything which could cause large market movements, then it's likely the margin rates will remain. 

[cate]

Thanks, @JamesIG and @PandaFace. It wasn't that I was hoping 25% would come down to 20%, it's that I was afraid it might go up by the same sort of percentage as everything else - which I guess would take it to 100%! Anyway, I am now officially reassured. Thanks!

Cate

[Trevbeats]

Hi, all

Well, it is here the wonderful Esma rule.. Thank you, Europe so glad you are making it much harder now for the small retail trader and what I heard it is to wipe out binary option,  so why interfere with the proper traders that are doing it the correct way? I hear its on a time trial for 3 months? 

Can any help with this question, please? If one was to open up and account what would be the right balance to play with without getting stopped out?

 Cheers

TreV