Investment and trading blog created for wider education of like-minded persons.
Sunday, 19 June 2016
The Brexit and its effects
Forex traders ain’t the only ones prepping their game plan for the EU referendum… Brokers are gearing up to make some adjustments for the Brexit vote, too! In case you’re scratching your head wondering what in the world all this is about, make sure you read our Brexit primer first.
As you’ve probably guessed, this highly-anticipated event is bound to bring an unprecedented amount of heart-stopping volatility to the mix. Heck, even Brexit opinion polls from various groups have been enough to push pound pairs to spike this way and that!
Now brokers have probably learned their lesson from last year’s SNB shocker to remember that fast and furious market moves could potentially trigger margin calls and wipe clients’ accounts out in an instant. A number of brokers were even forced to close shop then! Apart from that, majority of market participants might make several adjustments to their trades or close their pound positions, enough to push the market in a particular direction ahead of the vote.
Because of that, a number of firms have already ironed out their plans to manage their exposure to this event risk, not just for pound and euro pairs but also for other U.K. securities. Thanks to the intel shared by a few of my honorary ninja traders, here’s an updated list of adjustments being made by forex brokers ahead of the Brexit vote.
Alpari: Adjustments in margin requirements for Standard, ECN, PAMM Standard, and Pro accounts by June 20
ActivTrade: Increasing margin requirements by four times for GBPUSD, GBPCHF, GBPAUD, GBPCAD, GBPJPY, GBPNZD, EURGBP, and UK100 index by June 19, and two times for several euro pairs and European indices
ADS Securities: Increased margin requirements on GBP pairs to 5%, EUR pairs to 2% and the UK100 index to 2%
FXPrimus: Increased margin for all GBP pairs and for Brent crude oil from June 19 to June 24
FXCC: 200% increase in margin requirements for all GBP pairs and 100% for EUR pairs as of June 13, 200% increase in margin requirements for EUR pairs and 100% for all remaining instruments by June 20. Margin call level raised to 150% and stop out level adjusted to 100%
Admiral Markets: Five-fold increase in margin requirements for GBP pairs and FTSE100 CFD. It will also disable internal fund transfers to and from GBP accounts via back office by June 23 and introduce close-only restrictions on trading exotic GBP crosses
Vantage FX: Two-stage adjustment to trading conditions for EUR and GBP pairs, USD/NOK, USD/SEK, DAX30, FTSE100, DJ30, SP500, and XAU/USD as of June 13 and also on June 20
Forex.com: Increase from 0.5% to 3% in minimum margin requirements for GBP pairs and UK indices by June 19. Increase from 0.5% to 1% in minimum margin requirements for EUR pairs, European indices, and US indices by June 19
IronFX: Increase in margin requirements for GBP crosses, FTSE100, spot metals, and UK shares by June 17 and possibly another round of adjustments by June 22
AxiTrader: Lower maximum leverage available for all products starting June 20 until market close on June 28
AFX Group: 100% increase in margin requirements for GBP pairs and FTSE100 index as of June 10, with potential adjustments upon appropriate notice
RoboForex: Close-only mode for GBP instruments from June 20 to 24, six-fold increase in margin requirements for GBP instruments for MT4 and MT5 ECN accounts and a twenty-fold increase in margin requirements for MT4 and MT5 Standard and Cent accounts
LiteForex: Increased margin requirements for GBP pairs, EUR pairs, commodities, and major indices. Five-fold margin increase for ECN, NDD, and PAMM accounts, a ten-fold margin increase for CLASSIC accounts, and twenty-fold increase for CENT accounts. Suspension of opening of new trades in a number of related currency pairs from June 20 to June 27
Tier1FX: Adjusted margin requirements for GBP pairs and UK100 index as of June 6, another round of adjustments by June 20 until further notice
Capital Index: Two-stage hike in margin requirements by June 17 and June 22 for GBP and EUR pairs, as well as European indices
FXTF: Changes to trading conditions for GBP-related currency pairs regarding bid-ask spreads
Orbex: Margin requirements for GBP and EUR pairs increased to 4% and margin for all other instruments at 1% as of June 16. Margin stop out level adjusted to 50% by June 20
FXCM: Adjustments for margin requirements for EUR and GBP pairs beginning on June 10, with additional increases by June 17
Saxo Bank: Revised starting margin levels for currency pairs with GBP, EUR, CHF, and JPY, as well as higher margin rates for U.K. Index CFDs that are GBP-denominated
IG Group: Increasing margin rates for all GBP pairs by June 10, with additional measures to be put in place by June 17 and June 22
OANDA: Lower maximum leverage on GBP pairs to 20:1 after the market close on June 17
CMC Markets: Margin changes for GBP pairs and several European indices to take effect by June 13
TradersWay: Increasing margin requirements on GBP pairs by four times as much (i.e. leverage on these pairs will be four times lower) by June 13
And the roses among the thorns…
easyMarkets: It will continue to offer 200:1 leverage, free guaranteed stop loss, no slippage, negative balance protection, and fixed spreads on GBP pairs
Trade360: No changes in margin requirements or leverage available, no limits on trading GBP pairs as well
Whether this plays out to their advantage or turns out to be a painful lesson in risk exposure remains to be seen, but it turns out that some exchanges would also rather be safe than sorry.
Moscow Exchange: Increasing margin requirements for EURUSD and GBPUSD FX futures contracts on June 20 and 21, with these changes up for review after the referendum results are announced