Apply for Professional Client Categorisation

The European Securities and Markets Authority (ESMA) has formally adopted new measures on the provision of CFDs to Retail clients in the European Union which took effect on the 1st of August 2018. The measures include significant downsize in leverage, a specific margin close out rule, restrictions on trading benefits, etc.

Being classified as a Professional Client means that the following will apply:

*Professional Clients are not entitled for ICF Compensation²

On 27 September 2019, the Cyprus Securities and Exchange Commission (“CySEC”) issued a Policy Statement (PS-04-2019), publishing the rules that restrict the sale, marketing and distribution of contract for differences (“CFDs”) in or from Cyprus in line with ESMA’s temporary product intervention measures.  CySEC has permanently introduced ESMA Measures into national law through Directive DI-87-09 and include:

• The adoption of the same leverage limits for all retail clients dependent on the type and volatility of the underlying asset:

– 30:1 for major currency pairs;

– 20:1 for non-major currency pairs, gold and major indices;

– 10:1 for commodities other than gold and non-major equity indices’

– 5:1 for individual equities and other reference values;

– 2:1 for cryptocurrencies.

• a margin close-out, when the clients’ funds fall to 50% of the margin needed to maintain their open positions on their CFD account;

• negative balance protection per account basis, so that retail clients cannot lose more than the total funds in their trading account;

• prohibiting firms from offering cash or other inducements to encourage retail clients to trade;

• requiring firms to provide standardized risk warnings informing potential customers the percentage of their retail client accounts.

Requirements in order to become a Professional Trader

You can become a professional client if you submit an application and meet among others two out of the three criteria mentioned below³:

1. Trading Volume – You have carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous 4 quarters (with Forex TB Limited and/or other providers).
2. Relevant Experience – You have at least one-year experience working in the financial field in a professional position, which requires knowledge of the CFDs market and services.
3. Financial Status – Your portfolio’s size⁴ is equivalent to or exceed EUR 500,000; cash deposits and financial instruments inclusive.

¹ A standardised margin close out rule at the percentage of the minimum initial required margin prescribed above on a per account basis. For professional clients’ trading accounts the percentage is subject to changes.

² The objective of the Investor Compensation Fund (ICF) is to secure claims of Retail Clients through the payment of compensation (up to €20,000) in cases where we default on our obligations to you, if certain conditions are met. Read more here.

³ You can decide whether you wish to submit an application now or at a later stage or even remain to be treated as retail client. Please note that you have the option to revert your status back to retail once you become professional at any time if you wish so.

⁴ Financial instruments include shares, cash deposits made to fund or profits accrued from investing in derivatives, debt instruments and cash deposits. They do not include property, traditional commodity ownership or the notional value of derivative instruments.

You can read more about the product intervention measures of ESMA here and at our Client Categorization Policy here.