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:

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

Amended Trading Hours for Australia Day (26 January 2021)

21 January 2021

Please be aware that Australia Day will be held on 26 January 2021. Kindly note that during this time spreads may be wider and liquidity may be thinner. Also, the following amended trading hours will apply. Indices  Tuesday 26 January 2021 AUS200 06:11 – 22:00 UTC The rest of the assets will trade according to their usual […]

Please be aware that Australia Day will be held on 26 January 2021. Kindly note that during this time spreads may be wider and liquidity may be thinner.

Also, the following amended trading hours will apply.

Indices  Tuesday 26 January 2021
AUS200 06:11 – 22:00 UTC

The rest of the assets will trade according to their usual trading time.

See the full calendar of amended trading hours.

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

Trading Hours for the US Martin Luther King Day on 18 January 2021

11 January 2021

Please note the amended trading hours that will apply on Monday 18 January 2021.

Please note the amended trading hours that will apply on Monday 18 January 2021.

🕤 All times in the following table are UTC (Coordinated Universal Time).
⚠️ During bank holidays spreads may be wider and liquidity may be thinner. They usually also give rise to changes to the applicable swap rates.
Commodities   Monday 18 January 2021
XAUUSD Early close at 17:43 UTC
XAGUSD Early close at 17:59 UTC
XTIUSD Early close 17:44 UTC
XNGUSD Early close 17:44 UTC
Indices
J225 Early close at 17:58 UTC
SPX500 Early close at 17:58 UTC
NDX Early close at 17:58 UTC
WS30 Early close at 17:58 UTC
US Stocks
All US stocks Closed

 

 

 

 

Related information:

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

brexit

Brexit, the endgame: what you need to know in a no-deal Brexit scenario

16 December 2020

With the year coming to an end and Brexit coming into force on January 1st 2021, we would like to remind you that Darwinex is Brexit ready. Below are some updates for both existing and new customers. Please note that these will be relevant only in the case of a no-deal Brexit.

With the year coming to an end and Brexit coming into force on January 1st 2021, we would like to remind you that Darwinex is Brexit ready. Below are some updates for both existing and new customers. Please note that these will be relevant only in the case of a no-deal Brexit.

No-deal Brexit for existing EU customers

What changes in your relationship with FCA-regulated Darwinex in a no-deal Brexit scenario? In short: nothing, if you’re an existing customer.

  1. The FCA continues to protect your right to trade with us.
  2. Your monies remain with Santander UK, Natwest Bank or Sabadell UK in London.
  3. Your Funds enjoy FSCS deposit protection and Lloyd’s insurance for up to GBP 500,000.

Brexit doesn’t impair your right to trade with counterparties in 3rd countries outside the EU. You could trade with Australian brokers, you continue to enjoy the right to trade with UK brokers.

No-deal Brexit for new EU customers

For Darwinex, a no-deal Brexit scenario means restrictions to market to new EU customers with our FCA entity. We’ll shortly share details of our new license in the EU, which will offer identical conditions to our UK entity.

Our FCA-regulated UK entity will, in any case, continue accepting EU customers whenever reverse solicitation applies. Reverse solicitation means traders and investors approaching Darwinex on their own initiative and Darwinex not having solicited them to trade or invest.

We’ve recorded a podcast episode about Brexit and prepared a Brexit FAQ. Feel free to send to info@darwinex.com any questions you might have and we’ll answer them for everyone’s benefit!

Navidad

Darwinex Trading Hours for the 2020 Christmas & New Year Holiday Period

14 December 2020

The Darwinex Trading Schedule for the 2020 Christmas and New Year Holiday Period is already available in the calendar of Amended Darwinex Trading Hours.

Christmas is around the corner!

The Darwinex Trading Schedule for the 2020 Christmas and New Year Holiday Period is already available in the calendar of Amended Darwinex Trading Hours.

Note that during the Cristmas and New Year holiday period spreads may widen and swaps may be affected by the ‘turn’ effect. The ‘turn’ effect is a phenomenon that exists in financial markets which is caused by supply and demand for funding over key dates such as year or quarter-end. This can create anomalies in the forward curves for certain currencies, and we are already beginning to see this priced into the year-end swap points that we receive from our liquidity providers.

Further, you may want to check out what happens if you want to buy/sell a DARWIN which has underlying trades open with different opening/closing times.

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!

Trading Hours for the 2020 US Thanksgiving Holidays

17 November 2020

Please note the amended Darwinex trading hours for the upcoming US Thanksgiving holiday period on 26th and 27th of November 2020.

Please note the amended Darwinex trading hours for the upcoming US Thanksgiving holiday period on 26th and 27th of November 2020.

During bank holidays spreads may be wider and liquidity may be thinner. They usually also give rise to changes to the applicable swap rates.

All times are UTC.

 Instrument November 26th 2020 November 27th 2020
COMMODITIES
XAUUSD Close at 17:44:00
Close at 18:29:00
XAGUSD
Close at 17:59:50
Close at 18:14:50
XTIUSD
Close at 17:44:50
Close at 18:29:50
XNGUSD
Close at 17:44:50
Close at 18:29:50
INDICES
J225
Close at 18:00
Close at 18:15
SPX500
Close at 18:00
Close at 18:15
NDX
Close at 18:00
Close at 18:15
WS30
Close at 18:00
Close at 18:15
STOCKS
US Stocks Closed
Close at 17:59

The rest of the assets will trade according to their usual trading time.

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

apalancamiento esma

NextEra Energy Stock Split 4:1

19 October 2020

The NextEra Energy stock split is approaching. At Darwinex we will apply the stock split on October 27th.

The NextEra Energy stock split is approaching. $NEE shares will be split 4-for-1. The number of shares will be multiplied by 4 and share prices divided by this same value.

At Darwinex we will apply the stock split on Tuesday October 27th at market open.

In live accounts we will adjust open position to the split without the need to close and reopen trades. Pending orders will be cancelled. In MT5, the hedged positions will be closed and the split will be applied to the resulting net position.

In demo accounts we will close all open positions in $NEE on Monday afternoon. Pending orders will be cancelled.

$NEE stocks will be available for trading from Tuesday, October 27th, at the post-split price.

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

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. -- % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.