Do not invest more money than you can afford to lose.
Forex and contracts for difference (CFDs) broker Markets.com has decided to no longer act as market maker, finance media Finance Feeds reported on Friday, citing an email the broker has sent out to clients. The broker switching to straight through processing (STP) order execution and is making changes to its trading conditions to meet the new regulatory rules of the Cyprus Securities and Exchange Commission (CySEC), from which it holds a license.
The changes will come into effect as of 29 January, 2017.
STP brokers refer client orders directly to liquidity providers through a no dealing desk (NDD) service. This way orders are executed faster, with no unnecessary delays and no re-quotes.
The broker is lowering the default leverate to a maximum 50:1 and restricting leverage ratios for less experienced traders. Moreover, it is introducing a negative balance protection and hiking the margin close-out level to 50%, as well as the margin call level to 70%. In addition, Markets.com will no longer offer bonuses and other awards. For more details refer to the table below.
“[…] we consider that the fair treatment of all clients, in a transparent and secure dealing environment, is crucial for generating long term trust from clients. We therefore fully support these regulatory efforts and are taking the below action to address these,” Markets.com said in its email, as cited by the media.
To reflect the changes, the broker will also update its documentation, including its Terms and Conditions of Trading, Key Investor Document, Conflicts of Interest and Best Execution Policies.
The CySEC announced in late November last year it was to alter the standards for key forex trading conditions. It said it was setting a new leverage cap of 50:1 and to ban bonuses or other benefits to promote risky trading instruments. The changes were triggered by the recommendations and guidelines of the European Securities and Markets Authority (ESMA) from mid-October in regards to forex and binary options regulation.
“Our home regulator – the CySEC, is seeking to raise conduct standards across the industry for CFDs, to ensure fair outcomes for all clients. This initiative by CySEC is broadly in line with guidelines issued by the European Securities and Markets Authority (ESMA) and measures introduced or being planned to be introduced by other European Union regulators,” according to Markets.com.
Indeed, the UK Financial Conduct Authority (FCA) has also announced the introduction of similar limitations. While the new requirements set by the CySEC sounded rather as a recommendation, the UK watchdog used a more compulsory tone.
Markets.com is operated by Safecap Investments, a CySEC licensee and also a subsidiary of gambling platform developer Playtech. In addition, Markets.com holds a license by the Financial Services Board (FSB) in South Africa.
Following are the changes Markets.com will make in its business conditions:
Item Number | Overall description | Key notes and Alert |
1 | Introduction of lower default leverage ratio of 1:50 and the option to select 1:25, 1:100 and 1:200 leverage ratios, based on the underlying instruments and our leverage policy |
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2 | Restrictions to leverage ratios for Less Experienced retail clients |
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3 | Negative Balance Protection |
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4 | Change to Margin Close Out level from 20% to 50% Change to Margin call notifications at only the 70% level |
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5 | Termination of bonuses |
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6 | Introduction of Market Execution mode of trading |
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7 | Changes to inactivity fee |
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8 | Revised Best Execution Policy |
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9 | Revised Conflicts of Interest Policy |
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10 | Introduction of new complaints page on our trading platform |
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11 | Key Investor Document |
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12 | Revised Terms and Conditions of Trading |
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