As a Retail Client you enjoy the greatest protection with rules and regulations imposed by the Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA) designed to ensure you are given every opportunity and assistance when trading in financial markets.
Under rules introduced by ESMA, which all FCA regulated firms must adhere to by 1st August 2018, a Retail Client has Negative Balance Protection (NBP) meaning they cannot lose more than they have deposited with a broker.
The funds they deposit are also segregated into Client Trust accounts with banks, ensuring the safekeeping of their money in case of anything adverse happening to the broker, as this is kept separate from the brokers own funds.
In addition to that, Retail Clients are also protected by the Financial Services Compensation Scheme (FSCS) which will step in with up to £85,000 per client in the rare instance where if a broker fails that not all the correct amount of client money has been segregated.
Retail Clients also have access to the Financial Ombudsman Service (FOS) who in the event of a dispute with a broker will intervene, look at the facts and pass judgement.
However, in an attempt to ensure that inexperienced traders to not lose too much money, the regulators have imposed restrictions on the leverage that Retail Clients can be offered, which limits the size of trades they can make based on their deposits [see AxiTrader Product Schedules].
The level at which Retail Client losing positions will be automatically closed by online trading platforms is set at a higher level than for those of Professional Clients.
Also, certain bonuses and other incentives previously offered to some Retail Clients are no longer allowed as this was seen by the regulators as an inducement to attempt to get Retail Clients to actively trade.