EU Watchdog to set Limits on CFDs and Cryptocurrencies

ESMA has declared leverage limits on the provision of contracts for CFDs and cryptocurrencies for retail investors in the EU
28 March 2018   428

The European Securities and Markets Authority (ESMA) announced these measures as temporary ones. The orders will be issued in the EU's official journal and come into force in one month for binary options and two months for CFDs.

The intervention measures for CFDs contain leverage restrictions on the opening of a CFD by a retail client from 30:1 to 2:1. The impact limits are: 30:1 for major currency pairs; 20:1 for non-major currency pairs, gold and major indices; 10:1 for commodities other than gold and non-major equity indices; 5:1 for individual equities and other reference values; and 2:1 for cryptocurrencies.

The other intervention measures include the following:

  • a margin implementation rule per account. It will ration the percentage of of margin at 50% of minimum initial required margin, demanding providers to close out 1 or more of a retail consumer`s open CFDs; 

  • the account basis protection from the negative balance. This will state a guaranteed limit on retail client losses;

  • the bound of the motivation suggested to trade SFDs;

  • a risk prevention comprising the percentage of losses on a CFD provider`s retail investor accounts, delivered in a normalized way.

So the market for financial instruments providing exposure for cryptocurrencies will be closely monitored. The application of leverage limits can also maximise the possibility of a larger gain. Automatic margin close-out makes a degree of defence for investors as it declines, though it does not exclude, the risk that the investor loses all or more than their initial margin.

ESMA has decided to will implement a 3-month ban on the marketing, distribution or sale of binary options to retail investors since the risks connected with the inherent features of binary options, such as an expected negative return and inherent conflicts of interest, make these products unsuitable for retail investors.

In contrast with the options that can serve a valuable role in hedging exposure to certain assets, binary options do not correspond any real investment needs for retail investors. These options can also attract compulsive gambling behaviour.

Ethereum VM May Have Vulnerability

The vulnerability is reported by NettaLab Twitter account
12 November 2018   65

On November 9, a statement appeared in Netta Lab’s Twitter account that the organization discovered a vulnerability in the Ethereum virtual machine that allows to execute smart contracts endlessly without paying for gas online. The researchers also allegedly turned to the operator of the American database of vulnerabilities, where they registered the corresponding discovery.

Netta Labs discovered an Ethereum EVM vulnerability, which could be exploited by hackers. The vulnerability can cause smart contracts can be executed indefinitely without gas being paied.

Netta Lab's Twitter

At Netta Lab's request, Google demonstrates the site of the project, which specializes in auditing smart contracts under the Netta Lab brand, but the Twitter accounts of the projects do not match. Note that the profile that reported the vulnerability was registered in November.

Many users expressed doubts about the authenticity of the information that appeared, but then the creator of the NEO project Da Hongwei said that he spoke with the CEO of Netta Labs and asked the researchers to audit the NEO virtual machine.

Nevertheless, Vitalik Buterin wrote on Reddit that this is a vulnerability in the Python-implementation of the virtual machine, which was first reported on GitHub 9 days ago. This means that the main clients (go-ethereum; parity and cpp-ethereum) are not affected.