What are the proposals?
One of the key proposals would require all clients to put down significantly more money upfront to trade. On the FTSE 100 and other key markets, it could mean a ten-fold increase in the margin required to open a position.
For example, let’s say the FTSE is trading at 7100 and you open a spread betting position at £10/point. The margin you’d put down is as follows:
Current margin requirement Proposed margin:
Clients with more than 12 months’ trading experience Proposed margin:
Clients with less than 12 months’ trading experience
£355 (0.5% x 10 x 7100) £1775 (2.5% x 10 x 7100) £3550 (5% x 10 x 7100)
As you can see, the current margin requirement of £355 would increase to £1775 for experienced traders, and £3550 for inexperienced traders.
We completely support the FCA in seeking to raise conduct standards across the industry. However, we believe that clients would be better served by keeping leverage limits proportionate. Measures such as limited-risk accounts offer stronger protection to those that need it, rather than enforcing higher margin rates for all.
Thanks to IG
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