FCA bonus ban and leverage cap sends IG, CMC and Plus500 shares diving 26-30%


esma leverage cap ig plus500 cmc

The fallout from the FCA’s move this morning to ban account opening bonus payments to retail traders, as well as a hard 50x leverage cap on CFD trading, has been quick and swift. And, fairly severe.

Shares of several publicly traded FCA regulated Retail Forex and CFD brokers including IG Group Holdings plc (LON:IGG), CMC Markets Plc (LON:CMCX) and Plus500 Ltd (LON:PLUS) were absolutely pummeled this morning following our report on the FCA’s release of ts new directives.

In the first 90 minutes of trading this morning on the London Stock Exchange:

  • IG Group shares were down 30%
  • CMC Markets stock is off 29%
  • Plus500 Ltd shares are down 26%

We will soon see if the moves are over-reactions or not.

Our view is that these moves should not have much effect on the larger, established online brokers such as those listed above. They typically are not the ones enticing new clients with deposit bonuses – that’s mainly the domain of newer, smaller, more aggressive brokers who aren’t working off reputation.

And, clients at larger brokers tend to stay longer, and trade with less leverage. The percentage of overall trades involving leverage of greater than 50x at brokers such as IG, CMC Markets and Plus500 is fairly low.

We will continue to follow this story as it develops.

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  • Stefan

    this is gonna kill the small brokers who only have bonuses to offer when competing with the like of IG. or who advertise 1000x leverage. This should be GOOD for IG and CMC, because the clients of those small brokers, no longer getting bonuses or ridiculous trading leverage, will now go to the big brokers.

  • Spartancapital

    The big brokers won’t benefit. All that will happen is that any person who wants leverage will go to a broker outside the UK or Cyprus. We have been shorting IG since the ESMA papers and will continue to do so until they change their model which will most likely mean management restructuring.

  • Ken

    This will not stop people losing money, it will simply slow it down…..the FCA simply doesn’t understand this market at all…….

  • Stefan

    Disagree, Ken. It’ll do a lot more than just slow down client losses. The problem with excessive leverage is that clients are very easily closed out of their positions in the short term, even if their trades would have panned out in the long term. Using less leverage prevents that. If the FCA is right that 82pc of CFD traders lose, that figure will be a lot lower once reduced leverage is imposed. Won’t be 50:50, but will be a lot less than 82pm.

    And remember, 1:50 is still a lot of leverage! If you are trading stocks at online brokers all you get is 1:2.

    • Ken

      Take a look at the figures for clients losses in the US and Japan……..as I said, clients will still lose money.

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FCA bonus ban and leverage cap sends IG, CMC and Plus500 shares diving 26-30%

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