BOARD
MiFID 2

Gearing up for MiFID 2: our preparations and plea to ESMA

19 September 2017

MifiD 2 – a pan-european piece of financial legislation applies from January 3rd, 2018.

10 years in the making, MifiD 2 builds on its predecessor, “to improve the functioning of financial markets, making them more efficient, resilient and transparent.”

Whilst the overall scope of MiFID 2 is way beyond our scope …

MiFID 2 & Retail Brokerage

But does it affect the retail brokerage industry?

Quite a lot. ESMA, the Pan-european regulator behind MiFID2, has its eyes set on CFDs – intervening using rare legislative prerogatives reserved for “high priority” situations.

Why is that? Because retail trading has grown a lot (the trader movement is strong!). Unfortunately, it’s done so with teething problems that need fixing, pronto. In its statement, ESMA announces regime changes combining (and hopefully harmonising) the various measures introduced by national regulators, including:

  1. Leverage limits,
  2. Guaranteed limits on client losses, and / or
  3. Restrictions on the marketing and distribution of these products.

National strategies so far – our take

If we were in ESMA’s shoes, we’d make retail OTC trading “efficient, resilient and transparent” by forcing CFDs on Exchange, because this would tame the conflict of interest between retail traders and market makers. Without conflict, who would want retail traders blowing up? What would be the point of leverage limits, guaranteed stop-losses or marketing restrictions? (Could this be why IG are working on their own MTF?).

If you want more insight on why, in our view, on Exchange is the only way:

The CFD dragon needs to be slain! – Darwinex

Alas, national regulators haven’t suggested on Exchange for now… so we hope whatever ESMA comes up with overcomes the limitations of:

  1. FCA: Leverage limits (NB the FCA has since delayed policy to follow ESMA)
  2. BaFin: Guaranteed limits on client losses as introduced in Germany…

MiFID 2 – the Darwinex way

In any case, we’re luckily not in ESMA’s shoes (not an easy job!). We’re in our own – and there’s plenty we can – and will – do in the meantime.

Since launching Darwinex broker 3 years ago, we’ve NEVER traded against customers (and NEVER will). Instead, we invest in them. Slowly but surely… the likes of NTI prove that listing independent traders creates an asset, and that investor leverage is the sustainable business model.

And yet, on Exchange or off Exchange, more and more people actively invest their savings. Which unfortunately also means too many gamble away more than they can afford. The problem is: too many quit before learning how to do it. Because that’s bad (for them and for us), we’re re-vamping on-boarding procedures for even more alignment and transparency.

Without disclosing methodology & parameters (this could incentivise people to “game” the system against their own best interest), available leverage for users will depend on:

  1. Proven or proveable experience/training when trading with leverage
  2. Solvency – because no-one should risk capital they can’t afford to lose

MiFID 2 – what it means in practice

NB: all users will be allowed to purchase DARWINs – within their stated risk appetite. This is because DARWINs are comparatively low leverage (rarely more than 5:1)

We will segment the Trading user base using both pieces of information, and transition from:

  1. Inappropriate -> the aspiring traders’ gaps in either or both criteria are too large. We won’t accept his trades until he’s ready (watch out for more news in the educational space)
  2. On transit -> it’s appropriate for the user to trade, but we will restrict the leverage he can deploy
  3. Unlocked -> user has acquired enough experience. We will offer him/her all the leverage available to customers at any given time

We will disclose our internal categorisation to customers so they know where they are in their evolution from “novice” to “maximum” leverage.

In addition to the above segmentation, we will apply two further controls:

  1. For investors: from day 1, the risk management engine tracks Equity at Risk (EaR) for every investor portfolio. Investors can’t buy more exposure than their maximum risk threshold at any point in time – investors can only sell once they reach the maximum threshold
  2. For all customers: we will track customers’ overall P&L (for trading and investing), informing them about it. We will also warn when the threshold is exceeded. And we may withdraw permission to trade if we feel it’s inappropriate for him/her to continue trading

Last, but not least, the restrictions apply to new customers only.

Last News

Darwinex Trading Hours for the 2017 Christmas & New Year Holiday Period

15 December 2017

Christmas is around the corner! Please find below the Darwinex Trading Schedule for the 2017 Christmas and New Year Holiday Period (all times are displayed in UK time and changes to regular trading hours are highlighted in red).   Instrument    Friday 22nd Dec   Monday 25th Dec   Tuesday 26th Dec FX 22:01 Thu – 21:55 Fri CLOSED 22:01 Mon – […]

Christmas is around the corner!

Please find below the Darwinex Trading Schedule for the 2017 Christmas and New Year Holiday Period (all times are displayed in UK time and changes to regular trading hours are highlighted in red).

 

Instrument 

 

Friday 22nd Dec

 

Monday 25th Dec

 

Tuesday 26th Dec

FX 22:01 Thu – 21:55 Fri CLOSED 22:01 Mon – 22:00 Tue
Commodities
Gold 23:01 Thu – 21:55 Fri  CLOSED 23:01 Mon – 21:59 Tue
Silver 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
Platinum 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
Palladium 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
US Crude 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
US Natural Gas 23:00 Thu – 20:00 Fri  CLOSED 23:00 Mon – 22:00 Tue
DARWINS 23:00 Thu – 20:00 Fri CLOSED 22:00 Mon – 22:00 Tue
Indices      
STOXX50E 23:00 Thu – 21:55 Fri  CLOSED CLOSED
GDAXI 07:00 – 21:00   CLOSED  CLOSED
SPA35 07:00 – 19:00   CLOSED  CLOSED
SPX500 23:00 Thu – 21:55 Fri  CLOSED  CLOSED
WS30 23:00 Thu – 21:55 Fri  CLOSED  CLOSED
NDX 23:00 Thu – 21:55 Fri  CLOSED  CLOSED
J225  23:00 Thu – 21:55 Fri CLOSED CLOSED
AUS200 23:00 Thu – 05:30 Fri CLOSED CLOSED 
FCHI40  23:00 Thu – 21:55 Fri  CLOSED  CLOSED
UK100 23:00 Thu – 12:30 Fri  CLOSED  CLOSED 

 

 

Instrument 

 

Friday 29th Dec 

 

Monday 1st Jan 

 

Tuesday 2nd Jan

FX 22:01 Thu – 21:55 Fri CLOSED 22:01 Mon – 22:00 Tue
Commodities
Gold 23:01 Thu – 21:55 Fri  CLOSED 23:01 Mon – 21:59 Tue
Silver 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
Platinum 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
Palladium 23:00 Thu – 21:55 Fri  CLOSED 23:00 Mon – 22:00 Tue
US Crude 23:00 Thu – 20:00 Fri  CLOSED 23:00 Mon – 22:00 Tue
US Natural Gas 23:00 Thu – 20:00 Fri  CLOSED 23:00 Mon – 22:00 Tue
DARWINS*  22:05 Thu – 22:00 Fri  CLOSED 22:00 Mon – 22:00 Tue
Indices      
STOXX50E 23:00 Thu – 21:55 Fri CLOSED 23:00 Mon – 22:00 Tue
GDAXI 07:00 – 21:00  CLOSED  07:00 – 21:00 
SPA35 07:00 – 19:00  CLOSED 07:00 – 19:00 
SPX500 23:00 Thu – 21:55 Fri  CLOSED  23:00 Mon – 22:00 Tue
WS30 23:00 Thu – 21:55 Fri  CLOSED  23:00 Mon – 22:00 Tue
NDX 23:00 Thu – 21:55 Fri  CLOSED  23:00 Mon – 22:00 Tue
J225  23:00 Thu – 21:55 Fri CLOSED 23:00 Mon – 22:00 Tue
AUS200 23:00 Thu – 05:30 Fri CLOSED 23:00 Mon – 22:00 Tue
FCHI40  23:00 Thu – 21:55 Fri CLOSED 23:00 Mon – 22:00 Tue
UK100 23:00 Thu – 12:30 Fri  CLOSED  23:00 Mon – 22:00 Tue

As always, if you have any queries, please feel free to contact us at info@darwinex.com.

The Darwinex Team wishes you a Merry Xmas and a Happy New Year!

buho-navidad-darwinex-02

And the DarwinIA winners are… (November 2017)

1 December 2017

The November edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period. Place DARWIN Notional allocation 1st PUZ € 300,000.00 2nd AXF € 250,000.00 3rd STP € 210,000.00 4th CSP € 170,000.00 5th SVI € 150,000.00 6th […]

The November edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period.

Place DARWIN Notional allocation
1st PUZ € 300,000.00
2nd AXF € 250,000.00
3rd STP € 210,000.00
4th CSP € 170,000.00
5th SVI € 150,000.00
6th WIZ € 140,000.00
7th TSB € 130,000.00
8th HTS € 120,000.00
9th XAX € 110,000.00
10th NTI € 110,000.00
11th LZB € 110,000.00
12th CLA € 100,000.00
13th TZR € 100,000.00
14th MAT € 100,000.00
15th DDY € 90,000.00
16th CEM € 90,000.00
17th YIA € 90,000.00
18th ERQ € 80,000.00
19th QUA € 80,000.00
20th EEE € 80,000.00
21st SQG € 70,000.00
22nd AGD € 70,000.00
23rd FOF € 70,000.00
24th FEG € 70,000.00
25th EKB € 60,000.00
26th DSM € 60,000.00
27th BOT € 60,000.00
28th FJD € 60,000.00
29th RDD € 60,000.00
30th HTX € 60,000.00
31st RIB € 50,000.00
32nd BFT € 50,000.00
33rd ONE € 50,000.00
34th FCQ € 50,000.00
35th GPZ € 50,000.00
36th YHN € 50,000.00
37th ZTY € 50,000.00
38th PFZ € 40,000.00
39th PFI € 40,000.00
40th BGO € 40,000.00
41st JCZ € 40,000.00
42nd GTD € 40,000.00
43rd MMG € 40,000.00
44th APG € 40,000.00
45th YEC € 30,000.00
46th RFQ € 30,000.00
47th DJO € 30,000.00
48th VTJ € 30,000.00

 

Have questions about DarwinIA trading challenge ? At info@darwinex.com we’ll be happy to assist you!

Amended Trading Hours for US Thanksgiving Holidays (23 and 24 November 2017)

21 November 2017

Please note the amended Darwinex trading hours for the upcoming US Thanksgiving holiday period on 23 and 24 November 2017 (all times are in UK – GMT time).  Instrument 23 November 2017 24 November 2017 FX 22:01 Wed – 22:00 Thu 22:01 Thu – 21:55 Fri DARWINS 22:01 Wed – 22:00 Thu  22:01 Thu – 21:55 Fri  COMMODITIES     Gold* […]

Please note the amended Darwinex trading hours for the upcoming US Thanksgiving holiday period on 23 and 24 November 2017 (all times are in UK – GMT time).

 Instrument 23 November 2017 24 November 2017
FX 22:01 Wed – 22:00 Thu 22:01 Thu – 21:55 Fri
DARWINS 22:01 Wed – 22:00 Thu  22:01 Thu – 21:55 Fri
 COMMODITIES    
Gold* 23:01 Wed – 17:59 Thu 23:01 Thu – 18:44 Fri
Silver* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:44 Fri
Platinum* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:44 Fri
Palladium* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:44 Fri
US Crude* 23:00 Wed – 17:44 Thu 23:00 Thu – 17:29 Fri
Natural Gas* 23:00 Wed – 17:44 Thu 23:00 Thu – 17:29 Fri
 INDICES    
Australia 200 23:00 Wed – 22:00 Thu 23:00 Thu – 21:55 Fri
 Europe 50 23:00 Wed – 22:00 Thu 23:00 Thu – 21:55 Fri
France 40 23:00 Wed – 22:00 Thu 23:00 Thu – 21:55 Fri
Germany 30 07:00 – 21:00 07:00 – 21:00
Spain 35 07:00 – 19:00 07:00 – 19:00
Japan 225* 23:00 Wed – 17:59 Thu  23:00 Thu – 18:14 Fri 
UK 100 23:00 Wed – 22:00 Thu 23:00 Thu – 21:55 Fri
 US SPX 500* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:14 Fri 
 US Tech 100* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:14 Fri 
Wall Street 30* 23:00 Wed – 17:59 Thu 23:00 Thu – 18:14 Fri 
*Amended Darwinex trading hours.

As always, at info@darwinex.com we’ll be happy to assist you!

DARWIN conditional orders in live environment

14 November 2017

We have the pleasure to announce that we are finally rolling out DARWIN conditional orders in the live environment. Demand was so strong, this just couldn’t wait any longer! Conditional orders for live accounts The DARWIN Exchange now supports conditional orders in the live environment. Investors may now enter conditional orders so that when a […]

We have the pleasure to announce that we are finally rolling out DARWIN conditional orders in the live environment. Demand was so strong, this just couldn’t wait any longer!

Conditional orders for live accounts

The DARWIN Exchange now supports conditional orders in the live environment.

Investors may now enter conditional orders so that when a DARWIN quote:

  • Falls to a certain level, they buy it (Buy limit)
  • Rises to certain level, they buy it (Buy stop)
  • Falls to a certain level, they sell it (Stop Loss)
  • Rises to a certain level, they sell it (Take Profit)

NB: we’ve disabled Buy stops for now – we will activate them once everyone is comfortable with the other 3 limit order types.

 

In order to launch conditional orders in the live environment, we’ve also had to launch another much demanded feature – DARWIN candle charts.

Introducing DARWIN candle charts

We’re introducing candle charts, not for the purpose of charting, but to be as transparent as possible on whether DARWIN quotes hit a given level.

Candles represent a given time interval and have:

  • Opening quote: the first quote at the start of the interval represented by the candle
  • Closing quote: the last quote during the interval represented by the candle
  • High: highest quote in the interval
  • Low: lowest quote in the interval

Note that due to differences in the frequency of tick price movements and duration of candle periods, the close quote for a candle need not necessarily match the open quote for the succeeding candle.

Price granularity

Price granularity is a trade-off between accuracy/transparency and computational efficiency. Pick too little, and compromise transparency. Pick too much, and waste resources.

This is why we’ve opted for a 3-Tier approach:

  • Second level granularity: on quotes in the DARWIN platform since 15 August 2017
  • Minute granularity:  for the period between IPO/validation of the Darwin in question and the 15 August 2017
  • Hourly granularity: for the period pre Darwin IPO/validation, when there were no investors in the DARWIN. Transparency requirements are lowest – these are “fictitious” quotes that no investor experienced!
  • Exception on DARWIN re-sets: on occasions, owing to some execution issue on a DARWIN’s underlying strategy, DARWIN equity curves must be “simulated” back to what they would have been barring the execution issues. For the period where the curve has had to be re-created, or needs to be recreated in the future, granularity will be on an hourly basis (just like pre-IPO), and not on a minute/second basis as you would otherwise expect.

You might ask yourself, “Why only second level granularity from 15th August 2017?”. Well, it’s simple really. We simply didn’t think that we would need this level of detail.

Separately, we are aware that the treatment of exceptions is sub-optimal. Be assured however that there’s ongoing work both to minimise the probability of execution disruptions and to resolve the mismatch between the actual and “optimal” DARWIN equity curve. Unfortunately this is not a trivial issue, so it will take time to fix.

Drawdown calculation

We will continue to calculate Drawdowns off the “Return Chart”. Note that this still doesn’t reflect the “Min” Candle – we’re working  on fixing this. Meanwhile, we preferred to release the candles over waiting for ironing out all related issues.

Thank you for your understanding and we look forward to your feedback on how to improve the platform!

And the DarwinIA winners are…

1 November 2017

The October edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period. Place DARWIN Notional allocation 1st TKT € 300,000.00 2nd UYZ € 250,000.00 3rd ZXW € 210,000.00 4th DLF € 170,000.00 5th FEG € 150,000.00 6th […]

The October edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period.

Place DARWIN Notional allocation
1st TKT € 300,000.00
2nd UYZ € 250,000.00
3rd ZXW € 210,000.00
4th DLF € 170,000.00
5th FEG € 150,000.00
6th VQB € 140,000.00
7th MOW € 130,000.00
8th HTS € 120,000.00
9th VTJ € 110,000.00
10th STP € 110,000.00
11th JCZ € 110,000.00
12th CLA € 100,000.00
13th LVS € 100,000.00
14th NWU € 100,000.00
15th PUL € 90,000.00
16th LDR € 90,000.00
17th PHD € 90,000.00
18th DFL € 80,000.00
19th AGD € 80,000.00
20th CNU € 80,000.00
21st KGL € 70,000.00
22nd PEW € 70,000.00
23rd KYQ € 70,000.00
24th AXF € 70,000.00
25th FGC € 60,000.00
26th QTN € 60,000.00
27th VNE € 60,000.00
28th ECC € 60,000.00
29th FYW € 60,000.00
30th PUD € 60,000.00
31st ERQ € 50,000.00
32nd DZL € 50,000.00
33rd PMZ € 50,000.00
34th BNX € 50,000.00
35th WBH € 50,000.00
36th LLZ € 50,000.00
37th FTT € 50,000.00
38th KWC € 40,000.00
39th OOG € 40,000.00
40th NGS € 40,000.00
41st SRK € 40,000.00
42nd XYP € 40,000.00
43rd NAU € 40,000.00
44th VHI € 40,000.00
45th ONE € 30,000.00
46th FER € 30,000.00
47th BYC € 30,000.00
48th PUZ € 30,000.00

Darwinex Amended Trading Hours due to German Public Holiday (31 October 2017)

27 October 2017

Please note the amended Darwinex trading hours for the upcoming Bank Holiday in Germany on 31 October 2017 (all times are in UK time).  Instrument Trading Hours  FX 22:05 Mon – 22:00 Tue   DARWINS 22:05 Mon – 22:00 Tue  COMMODITIES   Gold 23:00 Mon – 22:00 Tue Silver 23:00 Mon – 22:00 Tue Platinum 23:00 Mon – 22:00 […]

Please note the amended Darwinex trading hours for the upcoming Bank Holiday in Germany on 31 October 2017 (all times are in UK time).

 Instrument Trading Hours
 FX 22:05 Mon – 22:00 Tue
  DARWINS 22:05 Mon – 22:00 Tue
 COMMODITIES  
Gold 23:00 Mon – 22:00 Tue
Silver 23:00 Mon – 22:00 Tue
Platinum 23:00 Mon – 22:00 Tue
Palladium 23:00 Mon – 22:00 Tue
US Crude 23:00 Mon – 22:00 Tue
Natural Gas 23:00 Mon – 22:00 Tue
 INDICES  
Australia 200  23:00 Mon – 22:00 Tue
 Europe 50 23:00 Mon – 22:00 Tue
France 40 23:00 Mon – 22:00 Tue
Germany 30* Closed
Spain 35 08:00 – 19:00
Japan 225 23:00 Mon – 22:00 Tue
UK 100  23:00 Mon – 22:00 Tue
 US SPX 500 23:00 Mon – 22:00 Tue
 US Tech 100 23:00 Mon – 22:00 Tue
Wall Street 30 23:00 Mon – 22:00 Tue
*Amended Darwinex trading hours.

As always, at info@darwinex.com we’ll be happy to assist you!