Qualify as a Professional Client to keep your current margin rates
The European Securities and Markets Authority (ESMA) have agreed on product intervention measures on the provision of Spread Bet and CFD products to retail clients. This will result in minimum starting margin rates ranging between 3.33% and 50% (depending on asset class).
These restrictions won’t apply to you if you qualify as a Professional Client. However, you would not be eligible for certain other regulatory protections.
Professional Client Status Details
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.
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.
Meet 2 out of 3 criteria to qualify as a Professional Client
You need to have made an average of 10 significantly sized transactions per quarter over the last 4 quarters
You need to have a financial instrument portfolio, including cash deposits, exceeding EUR 500,000
You need to have worked in the financial sector in a professional position for at least a year, which requires knowledge of the transactions or services envisaged
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. 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.
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.