Qualify as a Professional Client
to keep your margin rates

In the coming months the European Securities and Markets Authority (ESMA) will be introducing new regulations aimed at increasing conduct standards across the industry.

This will result in changes for Retail Clients, but you can qualify as a Professional Client to:

  • Keep your existing margin rates
  • Access a dedicated Client Relationship Manager
  • Remain eligible for all loyalty rewards and benefits

How will Clients be affected?

For Retail Clients the following changes will apply;

  • Maximum leverage limits on new positions of between 2 to 30 times dependent on the market type. See the table below.
  • Negative balance protection on an account level basis.
  • No monetary and non-monetary benefits (excluding research and information tools).
  • A 50% margin close out rule on an account level basis.

City Index Clients, who meet the qualifying criteria, can apply to become Professional Clients to remain unaffected by these changes.

Professional Clients are treated differently as they forego the protections provided for Retail Clients, but have access to increased leverage.

Please read the criteria to qualify to ascertain whether you would like to apply become a Professional Client.


Criteria to qualify

To qualify as a Professional Client you need to meet two of these three criteria:
View qualification criteria in detail

Professional Client vs Retail Client Comparison

The table below highlights the new limits on leverage and account features for Retail Clients and Professional Clients:

Professional Clients Retail Clients
Leverage
Major indices 200:1 20:1
Major currencies 200:1 30:1
Metals 200:1 20:1
Commodities 100:1 10:1
Shares 25:1 5:1
Cryptocurrencies 4:1 2:1
Account Features
Client Relationship Manager By invitation only
Negative balance protection
50% margin close out rule
Client Money Remains Segregated
Eligible for FSCS (Financial Service Compensation Scheme)*
Retain rights to complain to the Financial Ombudsman Service*
Best Execution & Trade Confirmations
(sent by the end of the business day)
Key Information Documents

*Professional Clients also:
Remain eligible for the Financial Services Compensation Scheme if you are a natural person.
Retain the rights to complain to the Financial Ombudsman Service when trading in a personal capacity.

For further information read more


Key ESMA changes for Retail Clients

Limits on leverage

Leverage limits will be reduced

Margin close out

Mandatory 50% margin close out rule

Negative balance protection

Trade with reduced risk

Professional Client Status Details

It is important that you understand exactly how a Professional Client will be treated differently to a Retail Client should you wish to apply for Professional Client status:

Unchanged protections

We are not obliged to offer the following to Professional Clients but have elected to continue doing so:

Client money remains segregated from our funds and will be unaffected in the event of our insolvency.

Best Execution remains unchanged as we owe all our clients a duty of best execution.

The detail of Trade Confirmations remain unchanged and are sent by the end of the first business day following the execution of the trade, or earlier.

Key Information Documents remain available to you.

Waived Protections

You will waive some FCA protections:

Margin and Leverage Limits remain unchanged despite the changes that ESMA introduce for retail clients.

Mandatory changes to product features which protect retail clients will not be mandatory for you. (e.g. negative balance protection and margin close out levels).

We will assume you have the relevant knowledge and experience levels to understand the risks in trading leveraged products.

We may use more sophisticated language when dealing with you as a Professional Client than we do with our retail clients.


Professional Clients also
Remain eligible for the Financial Services Compensation Scheme if you are a natural person.
Retain the rights to complain to the Financial Ombudsman Service when trading in a personal capacity.

Apply to become a Professional Client

Qualification criteria in detail

In order to qualify to become a Professional Client, you will need to meet at least 2 out of the 3 eligibility criteria outlined by the FCA. There will be no change to tax status or any additional cost to change to Professional Client status.

The criteria are as follows:

Trade size & Volume
You have traded, in significant size, in the spread bet/forex/CFD markets or other leveraged products (e.g. indices, shares, spot FX, futures, options, other derivatives etc.) at an average frequency of 10 transactions per quarter over the previous four quarters (with City Index and/or other providers).

Significant sized trades are classified as having a notional value of £10,000 for equities and £50,000 for forex, indices and commodities or equivalent in local currency.

Size of portfolio
The size of your financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds EUR 500,000 (or equivalent in your local currency).

Acceptable examples of savings and investments: Cash savings, stock portfolio, stocks and shares ISA, trading accounts, mutual funds, SIPP (excluding non-financial instruments).

Unacceptable examples of savings and investments: Company pension, non-tradeable assets, property, luxury cars, jewellery.

Professional Experience

You work or have worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

Margin close out rules

Margin close-out levels will change considerably under the new ESMA proposals. Initially the body proposed a 50% margin close out level which would have been enforced on a position basis.

As part of a consultation process involving some of the UK’s largest brokers, ESMA has adopted a more realistic, standardised approach on an account level basis.

This means that under new proposals, a broker will be required to close one or more positions should a client’s account balance drop below 50% of the required margin.


Negative balance protection

Under the new ESMA regulations, all retail traders will be required to have negative balance protection available on their account. This means that they account balance will never be allowed to go below zero, regardless of market conditions.



Background information

On 15th December 2017, the European Securities and Markets Authority (ESMA) issued a statement indicating that it is considering whether to restrict the marketing, distribution or sale of leveraged trading products, including rolling spot forex, to retail clients. The key restrictions currently being considered include:
  • Leverage limits on the opening of a position between 30:1 and 5:1, depending on the volatility of the underlying asset;
  • Negative balance protection to provide a guaranteed limit on client losses.

The headline proposal relates to leverage and will result in materially higher margin rates across all major indices and FX pairs, increasing in some cases six-fold from 0.5% to 3.33%. As a result, in order for you to fund your existing trading strategy, you may need to deposit significantly more funds with us in the form of margin.