More and more experienced clients on the market

The regulatory changes in recent years have been a challenge for Polish brokers, but after a year and a half, the tendency to become an experienced client is growing. This makes today’s OTC/CFD market investor more aware and better prepared to face the market.


At the beginning of August 2018, ESMA, the European Securities and Markets Authority, implemented a number of product interventions on the OTC market. They were aimed at protecting consumers and their capital, but it should be remembered that they contributed to the turbulence on the market. ESMA has cut the leverage (previously limited by the KNF to levels 1 to 100) to levels 1 to 30 on major currency pairs. The effect?

Clients started looking for a higher leverage outside the EU jurisdiction and domestic brokers were exposed to the outflow of clients. There was a lack of market salt, so the Polish regulator applied a globally unique solution – it gave regulated brokerage houses the opportunity to support their clients on their way to becoming experienced, entitling them to use the higher leverage.

The status of an experienced client gives the right to use a higher leverage, but on the other hand – it allows to keep the privileges, such as protection against a negative balance on the account of the most experienced clients on the market who have passed the test – explains Adam Korecki, Director of TMS Brokers‘ Customer Service Department.

Satisfied investors

Retail investors positively assess the impact of domestic product intervention on the CFD market in Poland. Due to the introduced status of an experienced client, ca. 95% of clients currently do not plan to change their brokerage and move their account to an entity registered outside the EU, while earlier such plans were declared by more than 2/3 of the surveyed investors,” said Marek Wołos, OTC brokerage house expert.

This satisfaction is confirmed by the numbers. In a survey on the impact of KNF’s product intervention on investors, conducted in November 2019 by the Chamber of Brokerage Houses, as many as 96% of the surveyed investors confirm that the status of an experienced client and higher leverage did not deteriorate the investment results. 54% of respondents said that the results did not deteriorate, and 42% said that they recorded an improvement in investment performance.

However, it should be remembered that only currency pairs with USD, EUR, JPY, GBP, CHF, stock indices and gold are affected by the higher leverage status. The introduction of the status of experienced retail client was to allow clients to make better use of investment opportunities, which, according to Adam Korecki of TMS Brokers, works.

Since the end of last year, most brokerage houses, in consultation with the Chamber of Brokerage Houses, have developed a uniform standard of tests to check the knowledge of those applying for change of status. Since then, we have seen constant interest, especially as clients appreciate us as a stable entity on the Polish market, which has been actively supporting investors in trading for over 20 years, Korecki admits.


The Polish Financial Supervision Authority has provided opportunities

Status of an experienced client – what does it give and how can you get it? One of the conditions is to gain adequate knowledge and obtain a positive test result. The investor verifies it by passing the test, after which he is given the opportunity to use a higher leverage of 1 to 100 (more about what conditions must be met – you can read here).

In order to gain the knowledge needed to pass the test, it is enough to go to e.g. tms.pl/client-experienced website. Because only in TMS interested parties will find over 50 hours of video materials containing a pill of knowledge about CFD and forex market. The educational videos cover topics from the areas of: technical analysis, fundamental analysis, rules of financial markets and brokerage account operation, as well as investment techniques and risk management. They also cover legal issues.

The process is thus facilitated. After logging in e.g. to the TMS client zone, in the “experienced client” tab, it is enough to find the materials and rework them. Then the client will be given access to the verification test. If you fail to pass the test the first time, it is possible to take it again after the specified time.

Simple process

The process is very simple. Applications are accepted in electronic form. An investor who applies for a change of status through TMS Brokers is supported at all times by his advisor, who keeps him informed about the status of the application. When a client meets the required conditions, the process takes about 1-2 days,” explains Korecki, director of TMS Brokers’ customer service department.

It is worth noting that when it comes to the issue of a sufficiently long period of market activity and trade/trade volume, the client does not need to have an account with the broker he is applying to. Traineeship can be documented with account statements from any other Polish or foreign broker, allowing trading in OTC instruments – explains Korecki.

The positive perception and interest in the status of an experienced client therefore contributes to the improvement of both clients who are better protected and so the industry due to the reduction of regulatory arbitrage. In other words: market developments protect retail investors while retaining experienced players in the country. Players who not only meet the turnover criterion, but are also well prepared in terms of content for investment. This is a unique phenomenon on the market because, according to the National Investor Survey 2019, every 10th researched person declares that he or she is not able to analyse financial instruments and, what is interesting, this percentage decreases slightly in the group of people with capital over PLN 500 thousand.

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