In 2018, ESMA introduced EU-wide restrictions on CFD and forex trading for retail clients, permanently reshaping how European brokers offer leverage. National regulators such as BaFin, CySEC, and the AMF apply these rules (or stricter national variants) to this day.
The Leverage Caps by Asset Class
| Asset class | Max retail leverage |
|---|---|
| Major forex pairs | 1:30 |
| Minor forex, gold, major indices | 1:20 |
| Other commodities, non-major indices | 1:10 |
| Individual shares | 1:5 |
| Cryptocurrencies | 1:2 |
Other Retail Protections Bundled In
- ▸Negative balance protection — you cannot lose more than your account balance.
- ▸Standardized risk warnings showing the percentage of retail accounts that lose money.
- ▸A margin close-out rule requiring automatic position closure at 50% of required margin.
- ▸A ban on bonuses and other trading incentives for retail clients.
Studies commissioned around the ESMA reform found the caps reduced the frequency of total account wipeouts, though most retail accounts still lose money overall due to strategy and psychology issues, not leverage alone.
Professional Client Reclassification
Brokers can offer to reclassify eligible clients as "professional," removing the leverage caps and several protections. Typically two of three criteria must be met: significant trading volume in recent quarters, a portfolio above a set threshold, or relevant industry experience.
Reclassification typically waives negative balance protection and reduces access to compensation schemes. Higher leverage magnifies losses just as much as gains — treat this decision as a risk-management choice, not a status symbol.
The Bottom Line
EU leverage caps exist because regulators observed systemic retail losses tied to excessive leverage. They constrain position sizing math but don't eliminate risk — understanding them is part of choosing a broker and account type deliberately.