FXTM introduces negative balance protection on back of latest CySEC rules

FXTM introduces negative balance protection on back of latest CySEC rules

Do not invest more money than you can afford to lose.


EU forex broker ForexTime, or FXTM, has added negative balance protection to all client accounts, the broker said on Thursday. This means that traders’ loss is limited to the amount they have in their trading accounts.

“The Company ensures that losses will never exceed the total available funds across the Client’s FXTM trading portfolio (negative balance protection),” the broker said in a notice to customers. “If a Stop Out execution has resulted in a negative Balance of the Customer’s Trading Account, the Customer shall be liable for this loss and must make a payment of the full and total amount due immediately.”

The changes have come into effect automatically as of Thursday. Traders are not required to take any actions concerning the change.

FXTM offers several different types of trading accounts – Cent Account, ECN_MT4, ECN_MT5, ECN ZERO _MT4, FXTM Pro, Shares Account, Standard Account, and Strategy Account.

The broker did not explain its move. However, considering its latest decisions, it might be motivated by the recent regulatory changes in Cyprus, where the broker is authorized. Following the recommendations of the European Securities and Markets Authority (ESMA), the Cyprus Securities and Exchange Commission (CySEC) recently started requiring a negative balance protection from brokers under its supervision. In addition the regulator announced the ban of bonuses as a measure to attract clients and the introduction of lower default leverage cap (50:1) for forex and contracts for difference (CFDs). For less experineced traders, the cap will be lower (20:1).

Also in February, FXTM announced it is cutting the maximum leverage rate it offers for forex instruments to 500:1 from 1,000:1, also in line with the CySEC rule changes.

FXTM is not the only broker to alter its trading conditions to meet the new regulatory requirements in Cyprus. Earlier this month RoboForex also said it is bringing negative balance to all accounts, regardless the total amount of compensation paid to the client. In addition, others have also changed their trading conditions, prompted by the new regulatory rules, include Exness, HotForex, ActiveTrades, VinciCM and Invest.com and Alfa-Forex.

FXTM is based in Cyprus and is regulated by the Cyprus Securities and Exchange Commission (CySEC), which allows it to provide its services in all EU countries. The broker also holds a license from the Financial Services Board (FSB) of South Africa. It has also set up a London-based unit, but it has provided no information at the time as to whether it plans to acquire a UK license.

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