Cyprus-based forex broker FXPrimus issued on Tuesday a notice, informing investors that it will increase to 2% the minimum margin requirement for all pairs containing British pound (GBP) and Brent oil. The move, which is motivated with the coming of the UK referendum, will be temporary and will be into effect from 19 June, 2016, until the close of trading on 24 June.
The broker noted that it may extend the increased margin period in case there is an extreme market volatility.
The UK will hold a referendum on 23 June, 2016, to decide whether the country will exit the EU (aka Brexit) or remain in the union (aka Bremain). Both scenarios are highly likely, considering the on-going voter turnaround, and experts are not certain of the possible outcome of the referendum. Speculations and referendum pollings have already had a sensible impact on the markets, making them more volatile.
Whatever the outcome of the UK referendum, it would surely have a strong impact on the sterling pound, although at this point it is not certain whether in the long-term that would be a positive or damaging effect. The UK referendum is among if not the most important political event this year. Many experts refer to it as having historic significance.
FXPrimus is just one of many forex brokers to take precaucious measures to minimize client losses in relation to the upcoming referendum.
Earlier on Tuesday, three major UK brokers – FXCM, Oanda and IG Group, also announced higher margins as the UK referendum is nearing. Z.com Trade and JustForex are another two forex broker to also increased their margin requirements for GBP pairs, due to possible hike in market volatility in the weeks prior and after the referendum. Meanwhile, others like One Financial Markets, FxPro, and Saxo Bank have alerted investors to the expected risks, but have not taken any precocious measures regarding trading conditions, at least not as of now.
Brokers are not the only market participants concerned with the upcoming vote. In mid-May, the Cypriot regulatory body, the CySEC, issued a notice addressed towards Cyprus Investment Firms (CIFs), which it oversees, requesting from them to take precocious measures in regards to the the possible exit of the UK from the European Union.
According to the latest data from IG Group’s EU Referendum Barometer, which was published on Monday, the share of the broker’s clients who believe that the UK will remain in the EU has went down to 69%, compared to 81% as reported on 25 May. Respectively, those who expect the country to leave the EU have increased to 31% from 19%.