Anyone who has reasonable arguments should send them to ESMA by February 5 :
https://www.esma.europa.eu/sites/default/files/library/esma35-43-904_call_for_evidence_-_potential_product_intervention_measures_on_cfds_and_bos_to_retail_clients.pdf
What exactly are ESMA rules for classification as a professional trader ? In Germany, one of the criteria would be more than 500.000 € in total assets. Or more than 1 year experience as a professional in the financial sector. I guess the latter may be a flexible matter.
I will protest with ESMA, saying that the proposed leverage limitation should only be applied to inexperienced traders (where it may actually make a lot of sense, don’t we all know this ?).
Implementing a leverage limit for experienced private traders may drive them into professional accounts where they would lose some of their advantages, for example the “no negative balance” benefits given only to private investors. In fact, risk of losses may be much higher with lower leverage, because more money has to be in the account for the same number of contracts. When you have a guarantee of “no negative balance”, the amount of money to be lost is higher than before and a leverage limitation would be entirely counterproductive.
When you send a protest to ESMA, do it wisely and seriously. I will say that leverage limits may be well-suited for inexperienced traders. However after one year and / or a certain number of trades made, it may be assumed that there is enough experience to trade with higher leverage.
In France, it was found that about 89% of all CFD clients lose money, most of them within the first 6-12 months. For this group, the ESMA rules may be well-suited, but probably not for algorithmic traders like ourselves with more experience and awareness of risk.
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