The FCA (Financial Conduct Authority) have this month proposed tightening rules on firms selling ‘contract for difference’ otherwise known as CFD products to retail customers, to improve standards across the sector and ensure consumers are appropriately affected. With many brokers and spread betting firms offering extremely high leverage to relatively inexperienced retail traders. The regulation that is being introduced will set lower leverage limits on retail clients, who do not have 12 months or more experience, do not have the adequate understanding of complex CFD products. Maximum leverage has now been capped at 50:1 for all retail clients, with those with less than 12 months’ experience being limited to 25:1.
Here at Blueprint Capital, we are aware of the risks of large leverage trading, both being unethical and providing no benefit to the trader, whilst only serving the interests of some brokerage firms that are exploiting the large transactions for their commission value. Within our BluFX Remote Trader Programme we already adhere to the lower levels of safe and productive leverage required to allow our traders the longevity and discipline required to succeed in capital markets. Therefore, we limit leverage to levels of 2:1, whilst increasing capital to traders as performance justifies by reaching profit targets. This way we limit the possible risk attached to each individual trading account whilst also helping our traders increase their profitability.
A study conducted by the FCA found that 82% of clients lost money on such CFD products, which also verifies the reason that on BluFX, we only trade the major FX pairs as these are the most liquid and transparent markets. Our multi-layered management systems that we have in place is aimed at reducing the number of retail traders that have less than 12 months trading experience from blowing out their accounts.
Our aims and values at BluFX considerably differ with your everyday retail brokerage as we have a vested interest in our traders being successful and consistently make profit. Therefore, we do not provide such high leveraged positions which could potentially result in large losses which is of no benefit to us or our traders. BluFX aims to provide the most professional remote trading environment to both experienced and novice traders which is signified by the recent changes in FCA regulation having no effect on the way we run our business as we already adhere to our own stringent risk and leverage parameters.