Exclusive: Poland backtracking on plans to reduce maximum FX and CFD trading leverage to 25x

Warsaw Poland fx leverage

LeapRate Exclusive… LeapRate has learned from sources in Poland that the country’s Ministry of Finance has decided to delay its plans to further limit the Retail FX and CFDs sector in the country.

Poland was one of the first EU countries to rein in Retail FX trading, passing a law in July 2015 which set maximum leverage for Retail FX positions at 100x (or conversely, requiring margin of 1% on all positions).

cfd-leverage-maximum-cap fcaThis past summer the Polish Ministry of Finance made further recommendations, introducing a draft law to quadruple the required margin in FX trading to 4%, reducing max leverage leverage to 25x. The Ministry also proposed doubling fines to unlicensed brokers which take Polish traders to EUR 2.4 million.

However we are now being told that Polish MoF sources have decided to at least delay the implementation of the new proposals, after pan-European financial regulatory body ESMA decided to look at the issue. ESMA plans to issue recommendations early next year on leverage in trading, which apparently it wants to see implemented across Europe. The UK regulator FCA also decided to delay its proposed leverage restrictions introduced late last year, which included a hard 50x leverage cap on FX and CFD brokerage, once ESMA formally announced that it was examining the issue.

The Polish MoF is also apparently worried that if it goes “too far” in putting the brakes on what retail traders can and cannot do, it might (or will likely) just drive Polish traders into the arms of foreign brokers offering more relaxed trading conditions (and more leverage). We believe that such a phenomenon is occurring in other areas such as Belgium, which put a blanket ban on leveraged FX and CFD trading last year. The properly regulated “good guy” brokers which obey local laws were forced to withdraw and cut ties with Belgian clients, and the void is being filled by unlicensed, offshore brokers. Not exactly a good outcome for Belgian retail traders.

If the Ministry eventually goes ahead and implements its tougher-than-the-rest-of-the-EU rules for leveraged trading, hardest hit will be the brokers with a significant market share among Polish retail FX traders, most notably Warsaw-based broker X Trade Brokers Dom Maklerski SA (WSE:XTB) which operates the XTB.com Retail FX brand and which generates about one-third of its Revenues in its home country. Despite some better financial results of late, XTB shares remain depressed at less than half of their May 2016 IPO value.

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Exclusive: Poland backtracking on plans to reduce maximum FX and CFD trading leverage to 25x


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