CFD Margin and Close-Out Rules

CFD margin is collateral posted to support leveraged exposure without owning the underlying asset. Retail close-out rules can require positions to be closed when equity falls too far relative to required protection.

In CFDs, margin is collateral that supports exposure to price movements in an underlying asset without transferring ownership of that asset. The article explains that CFDs use collateral-based margining and that providers apply margin close-out rules. It specifically notes ESMA’s product intervention framework, under which for retail clients the margin close-out rule is applied on an account basis at 50% of the total initial margin protection required for all open CFDs. At the same time, the article cautions that operational details vary by provider and jurisdiction. This matters because traders may assume they control when to exit, but provider-led close-out can occur automatically once equity drops to the relevant threshold.

• CFD product intervention summary
• Technical Q&As on CFD measures