Since 2018, every EU broker selling CFDs to retail clients has worked within the same five rules. Here is what each one does, with a worked example of the margin close-out.
Contracts for difference let a client take a leveraged position on the price of an asset without owning it. In 2018 Europe’s securities regulators concluded that, sold to retail investors, they posed “a significant investor protection concern.” The rules that followed still define how every EU CFD provider operates.
ESMA’s Board of Supervisors agreed the measures on 23 March 2018. The evidence behind them was stark: national regulators’ analyses “across different EU jurisdictions” showed “that 74-89% of retail accounts typically lose money on their investments, with average losses per client ranging from €1,600 to €29,000.”
ESMA adopted the measures as a temporary decision (Decision (EU) 2018/796 of 22 May 2018) and renewed it quarterly until 31 July 2019. In the meantime every national regulator adopted permanent measures that, in ESMA’s words, mostly mirrored the ESMA decision “without any changes.” In the UK, the FCA made its own permanent rules, which firms had to follow from 1 August 2019 for CFDs.
Leverage on opening a position is capped according to how volatile the underlying is:
| Underlying | Maximum leverage | Minimum margin |
|---|---|---|
| Major currency pairs | 30:1 | 3.33% |
| Non-major currency pairs, gold, major indices | 20:1 | 5% |
| Commodities other than gold, non-major equity indices | 10:1 | 10% |
| Individual equities and other reference values | 5:1 | 20% |
| Cryptocurrencies | 2:1 | 50% |
| Item | Value |
|---|---|
| Major FX pairs | 30:1 |
| Non-major FX, gold, major indices | 20:1 |
| Other commodities, non-major indices | 10:1 |
| Individual equities | 5:1 |
| Cryptocurrencies | 2:1 |
Source: ESMA, March 2018
Providers must close out a retail client’s positions when the funds in the account fall to 50% of the margin required to keep them open. The rule works per account, across all of the client’s open CFDs.
A worked example. A client opens a €30,000 position on EUR/USD. At 30:1, the required margin is €1,000. If losses reduce the account’s equity to €500, which is 50% of the required margin, the provider must close one or more positions. The client keeps what is left rather than losing the whole deposit.
Losses are capped at the money in the account. ESMA’s chair described the effect when the measures were announced: the rules “ensure that investors cannot lose more money than they put in.” A sudden gap in prices can no longer leave a retail client owing the broker money.
Providers may not offer monetary or non-monetary benefits, such as trading bonuses, to encourage retail clients to trade CFDs.
Every provider must show a standardised risk warning, including the percentage of its own retail accounts that lose money. It is the line visible at the foot of every EU broker’s website: “CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage,” followed by the firm’s percentage.
Because the percentage is firm-specific, it is one of the few performance figures that can be compared directly across brokers.
The measures apply to retail clients. A client who is reclassified as a professional client loses these protections, including the leverage caps and negative balance protection, which is why regulators scrutinise how firms handle requests to be treated as professional.
The rules are not historical. In February 2026 ESMA reminded firms that derivatives marketed as “perpetual futures” are likely to fall within these same measures. We cover that statement here.
A February 2026 statement tells firms that the commercial name of a leveraged derivative is irrelevant. What matters is whether it meets the definition of a CFD, and most perpetuals likely do.
A licence number on a website proves nothing on its own. Six checks, all on regulators' own registers, separate a regulated firm from a clone of one.
The UK's FSCS and Cyprus's ICF protect clients when a firm fails. Neither covers trading losses, and the limits differ by a factor of four.
