By Staff Writer
The Cyprus Securities and Exchange Commission (CySEC) has amended its rules for contracts for difference (CFDs), tightening leverage conditions for retail traders. From September 5, CFDs on non-major stock indices and commodities must carry a 10% margin requirement, effectively capping leverage at 10:1.
At first glance, the update looks minor. But in practice, it removes ambiguity that brokers had previously leaned on. The ESMA, which is the EU’s top markets regulator, already distinguishes between a handful of “major” indices such as the S&P 500, DAX and the FTSE 100, which allow 20:1 leverage, and all other indices, which should be capped at 10:1. CySEC has now spelled this out in black and white.
For retail traders, it doesn’t mean a new round of leverage cuts. But it does mean exotic, regional or thematic indices can no longer slip through under looser definitions. In short, there’s less room for high-risk exposure.
From the perspective of brokers, the amendment narrows flexibility in how they package and market CFDs. Smaller or niche indices will now firmly fall under stricter limits, a shift that could reshape product offerings in a competitive sector where innovation is often known to push regulatory boundaries.
This move is the latest step in a process that began back in 2018, when the ESMA first intervened after widespread retail losses and heavy-handed broker marketing. That temporary action brought leverage caps, bans on trading bonuses and standardized risk warnings in to play.
Cyprus made those measures permanent in 2019. Since then, CySEC has repeatedly used those rules in enforcement cases against Cyprus Investment Firms (CIFs), cementing the country’s role as the hub of Europe’s CFD industry and a frequent target of EU-level scrutiny.
CySEC’s latest action signals to brokers that pushing the boundaries on leverage will only invite regulatory action.
The only real unknown is whether regulators in Cyprus or Brussels will expand the list of “major” indices. If that happens, retail investors could gain access to higher leverage on a wider range of products. Until then, the latest leverage rules have been fixed by CySEC in black and white. Outside the biggest global benchmarks, 10:1 is the ceiling.
