ESMA introduced the package as a temporary product intervention and the national regulators of each member state, plus the fca in the UK, made equivalent rules permanent. The caps are tiered by volatility: 30:1 on major currency pairs, 20:1 on non-major pairs, gold and major equity indices, 10:1 on other commodities and minor indices, 5:1 on individual shares, and 2:1 on cryptocurrency where it is offered at all.
Three companion rules travel with the caps: the 50% margin-close-out-rule, mandatory negative-balance-protection, and a standardised risk warning carrying the firm's own loss-percentage-disclosure. Trading bonuses and similar incentives are prohibited for retail clients.
The caps apply to retail categorisation, not to the instrument itself. Clients who meet the criteria in professional-client-classification can be offered materially higher leverage, without the retail protections attached.
Example: a retail client wanting EUR 100,000 of EUR/USD posts EUR 3,333 at 30:1. The same notional in a single share CFD at 5:1 would require 20% of face value.
Related: fca, us-leverage-limits, asic-leverage-caps, margin-close-out-rule