ESMA/Negative Balance Protection: IS Prime experiences surge in business from Cyprus clients following Cysec ruling on both 125k and 730k brokers
13 September 2018 – Cysec has recently announced that “measures such as high margin calls and automatic stop out levels, low and intraday trading activity, monitoring leverage limits before major events are not adequate measures to comply with NBP [Negative Balance Protection] and still remain as a CFD CIF operating under a 125k Limited License.” As a result of this, IS Prime has seen a significant rise in the number of CIFs seeking an LP able to offer these guarantees down to an individual retail account level.
Raj Sitlani, managing partner of IS Prime, said, “With 14th September deadline rapidly approaching, we have seen a major uptick in the number of firms we are onboarding from the region, as well as an increase in trading volume, with a number of CIFs moving to IS Prime as a sole Liquidity Provider. This has been due to our ability to deliver the solutions required by their regulator, alongside extremely competitive commercials.”
Cysec is concerned that brokers, whether 125k or 730k, have increasingly been trading with LPs that are “domiciled in jurisdictions that do not have an adequate prudential regime.” To combat this, any broker trading with a counterparty that is not either based within the G20 or on a defined list will be required to have a further “1) €2.000.000 or 2) equal to 2% of their total risk exposure, whichever is the higher” on their balance sheet.
According to Raj Sitlani, “This move has further pushed CIFs towards the “Tier 1” Liquidity Providers and away from offshore entities.”
IS Prime provides institutional clients with multi-asset execution across Tier 1 aggregated liquidity venues together with Prime Brokerage services and cutting edge front to back technology. The London-based firm is part of ISAM Capital Markets, which also includes IS Prime Hong Kong and IS Risk Analytics. For further information about IS Prime, please visit www.isprimefx.com