The 50% margin close out rule is a precise regulatory requirement that governs retail CFD accounts in the European Union. Many traders confuse it with an ordinary margin call, or assume it also applies to challenge accounts at prop firms. It does not, and the distinction is worth stating clearly.
What the ESMA text actually says
In 2018, the European Securities and Markets Authority (ESMA) published a set of product intervention measures targeting CFDs and binary options sold to non-professional clients. Among them is a forced close out rule calculated on the whole account, not position by position: ESMA’s official document specifies a “margin close out rule on a per account basis”, standardizing the threshold at 50% of the minimum initial margin required. In practice, when the funds available on the account, plus the unrealized result of all open positions, fall below this threshold, the provider must close one or more of the client’s positions.
This mechanism differs from a 100% margin call, where the broker simply asks for additional funds before any automatic closure. The European rule leaves no such choice: at 50%, the close out is mandatory, not optional.
How France’s AMF adopted this measure
ESMA’s measure was temporary by design. In France, the Autorite des Marches Financiers (AMF) turned it into a permanent national measure through a decision dated August 1, 2019. That decision follows a finding documented by the regulator: the AMF’s text states that “these significant investor protection concerns led ESMA and the AMF to adopt a number of measures”, as a majority of non-professional clients had suffered persistent losses on these products. The 50% margin close out rule is part of that set of protections, alongside the leverage cap and the negative balance protection.
The exact scope of this rule: regulated retail accounts only
This point deserves emphasis because it is a frequent source of confusion. The ESMA/AMF rule applies to CFD accounts opened with a provider regulated in the European Union, for clients classified as non-professional. It says nothing about the margin rules of challenge accounts at a prop firm. These companies operate on simulated capital and set their own thresholds for margin, maximum daily loss, or overall loss, through a contractual set of rules specific to them, with no legal link to European CFD regulation.
In other words, if you read that your challenge account was closed at a given loss threshold, that threshold comes from the firm’s own rules, not from an ESMA or AMF regulation. Checking the leverage tiers and initial margin rules that apply to CFDs helps clarify the general regulatory framework, before looking at the specific rules of a challenge.
Why this distinction matters for a trader in a challenge
Understanding that the 50% margin close out and a challenge’s loss thresholds follow two different logics avoids misreadings. A trader setting up their account should read the rules specific to their own challenge rather than transpose a regulatory threshold designed for a completely different framework. To go further into the internal mechanics of a funded challenge, the page on how a funded trading challenge works details the rules that actually apply, and configuring your challenge lets you adjust the parameters offered by WeGetFunded.
If you are looking for a framework designed to be customizable, WeGetFunded offers a 1 Step Challenge built around your trading approach, with clear rules distinct from any retail CFD regulation.