It has recently come into notice that a plethora of EU based CFD as well as retail forex brokers have indulged in emailing their clients as well as affiliates or IBs to remind them that they will not be able to formally market the EU accounts to them. However, they have also notified them that the clients can find off-shore forex brokers to open accounts there in their own interest.
The emails are purely non-marketing to inform the clients. This is being done as per the new initiative that has been taken by ESMA to limit the leverage. This initiative has surely been frustrating for the clients since it has reduced the trading volume greatly at the broker level.
Though these emails do not include any direct promotional link for off-shore forex brokers, they obviously include instructions for clients to find the links on their own.
Restriction for Marketing to the EU Clients
As per the new set of rules for EU MiFID, clients can obviously open accounts with offshore FX brokers. But those brokers have been restricted from marketing to the EU clients. In a similar fashion, the brokers licensed in EU can obviously accept the new clients at their non-EU entities. This way, forex brokers can provide the clients higher leverage. However, they are restricted from marketing their off-shore forex brokers or non-EU entities to the EU based clients.
With new restrictive terms being placed on the brokers licensed in the EU, it is very clear that the non-EU brokers have already witnessed a huge boost in the volume as well as new signups over a period of last six weeks.
Especially, the huge increase in activity was seen amongst the ASIC controlled brokers based in Australia in the past few weeks since it is now being seen as one of the most trustworthy and properly regulated jurisdictions similar to that of EU which is still capable of offering higher leverage.