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
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!

End of Daylight Saving Time in Europe (October 25th 2020)

Please note that Daylight Saving Time (DST) ends in Europe on Sunday October 25th 2020 but our MT4 nd MT5 servers’ time is not changing until Sunday November 1st 2020 when DST ends in the US.

Please note that Daylight Saving Time (DST) ends in Europe on Sunday October 25th 2020 but our MT4 nd MT5 servers’ time is not changing until Sunday November 1st 2020 when DST ends in the US.

This means that there will be 1 week (October 25th through November 1st) where, for European users, most markets will open 1 hour earlier than during European DST, e.g. FX market will open at 21:04:01 GMT.

Instrument Trading Hours (GMT)
FX 21:05 Sun – 20:55 Fri (except 20:59:50 – 21:04:01 daily) 
DARWINS 21:05 Sun – 20:55 Fri (except 20:59 – 21:05 daily)
COMM.  
XAUUSD 22:01 Sun – 20:55 Fri (except 20:59 – 22:01 daily)
XAGUSD 22:00:01 Sun – 20:55 Fri (except 20:59:50 – 22:00:01 daily)
XTIUSD 22:00 Sun – 20:55 Fri (except 21:00:01 – 22:00 daily)
XNGUSD 22:00 Sun – 20:55 Fri (except 21:00:01 – 22:00 daily)
INDICES  
AUS200 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
STOXX50 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
FCHI40 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
GDAXI 01:30 – 21:00 (Mon – Fri)
SPA35 07:00 – 19:00 (Mon – Fri)
J225 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
UK100 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
SPX500 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
NDX 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
WS30 22:00 Sun – 20:55 Fri (except 21:00 – 22:00 daily)
US STOCKS 13:31 -19:59 (Mon – Fri)

As always, at info@darwinex.com we’ll be glad to assist you with any question you may have!

apalancamiento esma

Margin increase for EURGBP and EURJPY this Friday (Professional Clients)

14 October 2020

Our margin requirement for the EURGBP and EURJPY pairs for Professional Clients is changing this Friday, October 16th 2020, around 17:00 BST.

Our margin requirement for the EURGBP and EURJPY pairs for Professional Clients is changing this Friday, October 16th 2020, around 17:00 BST.

The measure is due to the recent increase in market volatility.

The new margin requirement will be 1% for both EURGBP and EURJPY, replacing the previous 0.5%.

It will remain in place until further notice and will affect both existing and new positions.

Kindly make sure you have enough available margin and equity in your account for the new margin level.

Need help? Please don’t hesitate to contact us at info@darwinex.com.

apalancamiento esma

Discontinuation of cryptocurrencies from 2021

15 September 2020

From 2021 Darwinex will no longer offer cryptocurrencies. As a first step, on Monday 21 September we will deactivate the creation of new accounts.

From 2021 Darwinex will no longer offer cryptocurrencies. Their low demand from our customer base does not justify the regulatory risk involved.

As a first step towards the discontinuation of cryptocurrencies, on Monday 21 September we will deactivate the creation of new accounts.

The cryptocurrency accounts already opened will be able to continue operating until the end of the year.

Amended Trading Hours U.S. Labor Day 2020

27 August 2020

Please note the amended Darwinex trading hours for the upcoming U.S. Labor Day on September 7th, 2020. All times are UTC.

Please note the amended Darwinex trading hours for the upcoming U.S. Labor Day on September 7th, 2020. All times are UTC.

Labor Day 2020

For your convenience:

– Normal DARWIN trading hours

– Normal FX/CFD trading hours

– Annual Calendar of Amended Darwinex Trading Hours

Apple And Tesla Stock Splits

25 August 2020

Tesla’s and Apple’s stock splits are approaching. As of August 31st, Tesla shares will be split 5-for-1, and Apple’s 4-for-1. Existing shares of each company will be multiplied by 5 and 4, respectively, and their share prices divided by those same values. At Darwinex we will apply the stock split on the weekend of August […]

Tesla’s and Apple’s stock splits are approaching. As of August 31st, Tesla shares will be split 5-for-1, and Apple’s 4-for-1. Existing shares of each company will be multiplied by 5 and 4, respectively, and their share prices divided by those same values.

At Darwinex we will apply the stock split on the weekend of August 29th.

In live accounts we will adjust open positions in $AAPL and $TSLA to the split without the need to close and reopen trades. Pending orders will be cancelled.

In demo accounts, however, we will close all open positions in $AAPL and $TSLA on Friday afternoon. Pending orders will be cancelled.

Both $AAPL and $TSLA will be available for trading from Monday, August 31st, at post-split prices.

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.