The KNF Defies the ESMA
KNF, the Polish Financial Supervisor Authority, publicly announced new requirements on contracts-for-difference with retail clients. The new requirements apply to high leverage clients, who can now manage a 100:1 leverage by meeting certain requirements. This information comes as a surprise, considering that it was only a few days ago that the European Securities & Markets Authority advised KNF not to move forward with their new leverage tier.
This isn’t the first time that the Polish Regulator has gone against the advisements of the ESMA. The refusal towards the advisement is because Poland is concerned that retail investors are moving offshore & that by having a higher leverage cap, they can stop future clients from leaving the Polish Finance Space.
It’s been mandated by the ESMA that all financial regulators across the European Union should implement a 30:1 Leverage. However, there have been multiple countries ignoring this mandate. Cyprus is the next country in line to introduce an experienced trader category for a higher leverage. The KNF’s justification is that there’s no proof to show that clients are losing money with higher leverages, and that the ESMA isn’t providing adequate services for the market.
The Assets & Future
The new experienced trader category through KNF will allow clients to trade contracts-for-difference with select assets at a higher leverage. The available forex pairs, god and stock indices available with the new 100:1 leverage includes: CAC 40, DJIA, FTSE, DAX30, NASDAQ, S&P 500, NASDAQ 100, NASDAW Composite, ASX 200, Nikkei 225 and Euro Stocks 50.
This new leverage category applies to retail clients and brokerages operating with CFDs in Poland. Banks, Foreign investment Firms, Investment Firms and Credit Institutions in Poland will also have access to the experienced trader category. Poland is also allowing for specialised entities that pass the Freedom Services Test can also maintain a 100:1 leverage in the experienced trader category.
The KNF has made themselves a target to the ESMA. The impact of their newly announced decision will cause for retail clients, brokerages & all other companies relating to CFDs to be continually monitored by the Unions financial watchdog. KNF will be evaluating the outcomes of the experienced trader category & 100:1 leverage for the next twelve months. The official publication of this announcement will be released of the “Official KNF Journal” in the coming days. The day it’s published is the day that it goes into effect nationwide.
Qualifying Clients
As mentioned prior to yesterday, there is a series of requirement that must be met before a client can start using the 100:1 leverage cap in the experienced trader category. The number of conditions that need to be met isn’t easy to accomplish.
The Requirements enlisted by the KNF for trading volumes include:
- Ten transactions with contracts-for-difference at a normal value of €50,000.00 exchanged in the Polish Zloty for four financial quarters is required.
- Fifty transactions with contracts-for-difference at a normal value of €100,000.00 exchanged in the Polish Zloty in one financial quarter is required.
- Forty transactions with contracts-for-difference at a normal value of €2,000,000.00 exchanged in the Polish Zloty for a 24 Month Period
The requirements for education & knowledge derivatives include:
- Clients are required to have a CFA, PRM, FRM, ACI, MPW and DI Professional Certificate to qualify for the experienced trader category.
- Fifty hours of training for twelve months in contracts-for-difference and derivatives is required. The certificates acquired with training must be confirmed by the organiser themselves, and provide accurate information ensuring that the client has adequate training.
- One year of work experience with contracts-for-difference and derivatives with a listed brokerage.