Be Aware: ESMA’s New Leverage Regulation Takes Effect Tomorrow

Be Aware: ESMA’s New Leverage Regulation Takes Effect Tomorrow

Earlier this year ESMA decided to change the regulation for leverage trading in Europe and tomorrow those new rules will be activated. This means that the available leverage for forex and CFD trading will be limited starting August 1.

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  • Leverage is a way to increase your profits, but it can also increase your losses. Because of this, ESMA has decided to limit the leverage and margin that brokers can offer in order to protect investors.

  • Different asset classes will have different limits, and there will also be a ban on negative balances.

  • Below you can find more information about how you will be affected.

During the past few months, we have reported on the fact that the European Securities and Market Authority (ESMA) decided to change their rules regarding leverage trading. And tomorrow, August 1, those new rules will take effect.

The reason behind the change in regulation is to try to create a safer and fairer marketplace where traders can thrive without the risk of going bankrupt. By limiting leverage, ESMA can limit the risk that traders are subjected to which will help active traders and also attract new traders that have opted out of forex and CFD trading due to the high risk.

When the new regulations take effect tomorrow, all brokers that operate in Europe will have to limit the leverage for European traders. That means that all of our favorite brokers such as IQ Option, Plus500, eToro,, etc. will be forced to change their products.

Note that the new rules only apply to Europe and that traders outside of the European Union won’t necessarily be affected.

What Does the New Leverage Rule Look Like?

ESMA’s new rules will affect leverage used for forex and CFD trading, and it will also completely ban binary options in Europe. Below is a list of the different limits.

  • Major currency pairs will be limited to leverage of 30:1
  • Mid-range currencies, gold, and major indices will be limited to 20:1
  • Smaller currency pairs, regular indices, and other commodities will be limited to 10:1
  • Stocks as CFDs and all other underlying assets will be limited to 5:1
  • And cryptocurrencies as CFDs will be hit the hardest with a leverage of max 2:1

In addition to limiting the available leverage, ESMA will also ban negative balances, meaning that all brokers will have to implement protection against it. A part of the new regulation also forces brokers to be more transparent and offer better guides on how to trade and avoid risks and potential losses.

Naturally, the new rules have been met by criticism from professional traders that rely on leverage to make a profit. However, for the most part, people seem to be positive about the new rules since it will help make the forex and CFD market more attractive.

So, let’s not forget that all of the brokers we recommend will offer a different product starting tomorrow, and today is your last chance to take advantage of higher leverage. 

Find the best trading platform. You capital is at risk when trading. Be careful.


Between 65-89% of retail CFD accounts lose money.