Scope Markets, the retail brokerage brand owned by Rostro Group, announced today (Monday) the launch of a new account type specifically for non-leveraged contracts for differences (CFDs) trading, an unusual service by a CFDs broker.

A Unique Offering by a CFDs Broker

According to the official press release, the account type is named Scope Invest, which will allow the brokerage customers access to more than 2,000 global CFD equities.

“Whilst our traditional CFD products continue to prove incredibly popular, the Invest account is unleveraged and only allows ‘long’ positions to be taken, a combination that significantly reduces the risk of capital losses,” Pavel Spirin, the CEO of Scope Markets, said.

The brokerage highlighted that its non-leveraged CFDs accounts will be denominated in GBP, USD, or EUR and will offer fractional shares. Further, it will offer commission-free trading services; however, the brokerage might make money from spreads.

Leverage or No Leverage?

Usually, CFDs are over-the-counter (OTC) derivatives that allow traders to take both long and short positions on the underlying instruments. These products are also leveraged, meaning traders can take positions of much higher value with their available capital. Although regulators in the United Kingdom, European Union, and Australia have brought heavy restrictions on offered leverage in recent years, brokers regulated in offshore jurisdictions offer astronomically high leverages.

Scope Markets also operates with six regulatory licences, including ones from the regulators of Cyprus, Kenya, and Belize.

Being derivatives, the CFDs traders do not own the underlying assets. Under the new non-leveraged accounts, investors will not own the underlying assets as the offered instruments are CFDs. However, Scope highlighted that the investors will continue to receive benefits from corporate actions, including dividend payments.

“CFDs undoubtedly provide a versatile and cost-effective way of gaining exposure to a wide range of assets from across the globe. However, the risks associated with leverage and short selling mean that the product isn’t suitable for all,” said Spirin. “Our Invest account provides customers with many of the benefits of share ownership but by using CFDs, transaction and holding costs can be eliminated whilst the capital risk is significantly reduced.”