CySEC Tightens CFD Rules with New 10:1 Leverage Cap

Stricter Margin Requirements for Non-Major Indices & Commodities Aim to Protect Retail Investors

The Cyprus Securities and Exchange Commission (CySEC) has formally capped leverage at 10:1 for retail investors trading Contracts for Difference (CFDs) on non-major commodities and stock indices. The decision brings Cyprus in closer alignment with EU-wide standards and is expected to reshape how brokers offer products to individual investors.

Key Regulatory Update

In an update to Directive DI87-09, CySEC clarified that retail clients must now provide a 10% margin when trading CFDs on:

• Commodities (excluding gold)
• Non-major stock indices

This effectively limits leverage on these products to 10:1, a move consistent with guidance from the European Securities and Markets Authority (ESMA).

What Prompted the Change?

This update, published in Cyprus’s Official Gazette on 5 September 2025, builds on regulatory reforms dating back to 2018, when ESMA introduced temporary leverage restrictions due to:

• Widespread retail trading losses
• Aggressive marketing by brokers
• Misleading promotions and excessive risk exposure

These measures became permanent in Cyprus in 2019 under the same directive.

Current CFD Leverage Limits for Retail Traders (Post-Amendment)

• 30:1 – Major Forex pairs
• 20:1 – Non-major Forex & Gold
• 10:1 – Other commodities & non-major indices
• 5:1 – Individual equities
• 2:1 – Cryptocurrencies

The recent amendment reinforces the 10:1 cap by closing loopholes that allowed brokers to misclassify certain indices.

Why This Matters for Investors and Brokers

While the headline leverage ratios remain unchanged, the new language removes ambiguity that brokers may have used to apply more lenient terms. Now:

• Retail investors face stricter exposure limits on exotic or thematic indices
• Brokers have reduced flexibility and increased compliance obligations
• Regulators have a clearer framework for enforcement

Market Impact and Investor Outlook

Although the amendment may appear minor, it signals regulatory continuity and increased supervision over CFD trading across Europe. For retail traders, this move could mean:

• Lower risk of large losses on thinly traded or volatile products
• Fewer opportunities to use high leverage on niche instruments
• Increased transparency when selecting a broker or trading product

For brokers operating in the EU, particularly from Cyprus, this update could prompt product restructuring or a review of leverage offerings.

Looking Ahead: What's Next?

Market watchers expect:

• Further refinement of what qualifies as a “major” index
• Possible action by other EU regulators to harmonise rules
• Potential product innovation by brokers to work within new limits

As new CFD products like ESG-themed indices or regional equity benchmarks emerge, their classification will determine the leverage available—impacting both broker offerings and retail investor strategies.

Bottom Line:
This move by CySEC underscores ongoing efforts to protect retail investors in a high-risk segment of the market. For investors, it's another reason to focus on risk management and transparency when trading leveraged products. For brokers, it's a reminder that compliance remains non-negotiable in today’s tightly regulated financial landscape.

Sources: (Financefeeds.com, WN.com)