Recently, the European Securities Markets Authority (ESMA) received a proposal by the KNF, Polish financial regulator. The proposal revolves around allowing certain qualified retail traders to trade forex with 100:1 leverage. However, ESMA did shot it down, stating that it is not justified nor proportionate. Instead, ESMA itself advised a more cautious proposal, which is not what the KNF had expected as an answer.
Now, it appears that the KNF is openly defying ESMA’s decision, and the brokers in Poland are already noticing it. The first company to take notice and make a move, opposing ESMA’s advice, was a retail broker XTB, who recently published an entirely new section of its website, dedicated to ‘experienced traders.’ Basically, XTB will allow its customers to be reclassified and use 100:1 leverage, provided that they are aware of the conditions and that they meet proper requirements.
The requirements are also listed on XTB’s portal, and they include proof of qualification. Anyone who wishes to make use of 100:1 leverage will have to provide such proof, and get classified as an experienced trader.
Meanwhile, CMC Markets’ local branch also published its own statement, commenting on the changes in the market. The company believes that ESMA is right to recommend caution and introduce certain restrictions. However, it also seems to understand that limiting investment strategies could have negative side effects.
The restrictions that ESMA had introduced have significantly changed the European investment landscape, particularly when it comes to retail investors. But, it is also clear that many did not agree with its views, as they chose to continue making high-leverage risky bets offshore.
Polish retail brokers came up with a more flexible solution
Poland’s financial regulator recognizes why ESMA’s restrictions are necessary, but its new move still brings certain exceptions from the rule, thus providing a more flexible solution. Simply put, those who can prove that they know what they are doing should be allowed to use any trading strategy they wish. CMC Markets commented on this as well, seemingly finding a solution well-balanced. It protects investors quite adequately — at least those who need it — but it still doesn’t limit them entirely.
CMC Market’s statement says that the introduction of the new ‘Experienced Retail Client’ status could allow better investment opportunities for some clients. They also said that it is worth remembering that Polish brokers announce the results of their CFD-investing clients each quarter. This brings higher transparency and shows how the clients are performing. That will make it relatively easy to see whether the broker’s decisions are beneficial for their clients or not.
Further, the broker stated that it would undertake an entire list of different initiatives in order to improve their clients’ education level. CMC Market is also planning to bring forth tailor-made education, which will be available online, as well as in the form of various seminars in some of the largest cities in Poland. Additional details regarding the move will follow soon, according to the broker’s announcement.