Germany : protection against the negative balance 100% guarantee
The trading accounts in Germany now offer a protection against the negative balance
Thursday, 10 August 2017, means the beginning of a new era for the Forex market and CFD trading in Germany.
According to the new national regulation to BaFin, the trading accounts that do not offer protection against the negative balance are now prohibited.
The settlement was announced on 8 may, the German broker so have had 3 months to implement the new rules.
The German market is crucial for the Forex brokers european. This new regulation should enable brokers to attract a customer base much wider. Some brokers will always offer the warrants or the certificates with leverage effect, via the OTC market or the official stock exchanges. Until now, many potential customers were reluctant to trade with CFDS because of the risk incalculable. The industry should therefore expect that the number of traders interested in the CFD be increased from five to ten times !
Who bears the risk now ?
The risks have not completely disappeared. The gaps of a weekend, or the events markets extremely volatile that can always bring an entire trading account to a negative balance.
However, the retail customers, the germans no longer have to compensate for negative balances, that are now brokers who take the risk. The tools of risk management should certainly be reviewed by all the brokers that offer their services in Germany.
The maximum exposure to clients and the stop out level may be limited and, in the case of important events (e.g., elections), the maximum leverage available could also be limited.
Clients should normally accept these limits for the benefit of a protection against the negative balance.