Three more brokers hike min margin over UK referendum

Three more brokers hike min margin over UK referendum

- in All News, Forex Brokers
UK EU

Forex brokers One Financial Markets, Tier1FX, and Vinson Financials will temporarily increase margins on GBP pairs an UK-related tradable instruments in relation to the upcoming UK referendum, which is expected to result in a dynamic market volatility. The new margins, which range between 2% and 5% for the different instruments, aims to protect client investments and minimize losses.

Since 6 June, Tier1FX has already hiked the margins for all GBP pairs and contracts for difference (CFDs) on the UK100 index to 2%. The broker will additionally increase the minimum requirements to  4% from 20 June until further notice.

As of Friday, clients of Vinson Financials who trade in GBP and EUR pairs are required to hold a 2% margin, and those who invest in either metals or the DAX, FTSE, DJI ,S&P500, NASDAQ indices have to have a margin of 3%. These levels will be into effect until 20 June, when the broker will increase by two percentage points the margin requirements for both GBP and EUR forex pairs and the above-said indices.

Meanwhile, One Financial Markets will hike to 3% the margins on a wide range of forex, indices, bullion, energies, and treasuries. These trading conditions will be effective from the market opening on 19 June and will be returned to their standard shortly after the referendum is over. The broker said the move is based on the action taken by its banks and liquidity providers.

Broker

New margin

Instruments

New margins start date

New margin end date

.

.

Vinson Financials

2%-4%

GBP and EUR pairs
Metals
Select indices

10 June

20 June

3%-5%

GBP and EUR pairs
Metals
Select indices

20 June

27 June

Tier1FX

2%

All GBP pairs
UK100 CFDs

market open June 20
(additional increase set for 20 June)

N/A

One Financial Markets

3%

Forex, Indices, Bullion, Energy, Treasuries

Market open on 19 June

N/A

Margin rates indicate the minimum amount clients need to have in their account balances when using leverage, a type of virtual borrowing traders can take from their broker.Leverage allows investors to operate with higher amounts and to increase their profit, since they provide them with higher buying power, but it also presents higher risk.

What is it all about?

The UK will hold a referendum on 23 June, to decide whether the country should 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.

Following is a graph of the GBP movement compared to USD for the last six months (9 December, 2015-10 June, 2016):

GBP 2016_06_10

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.

Who else is in?

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.

On Tuesday, ActiveTrades announced it will increase the minimum margin on several GBP pairs, as well as some UK indices and CFDs on UK-relates instruments. Three other major UK brokers – FXCM, Oanda and IG Group, are also set to increase GBP margins. FxPrimus, Invast Global, Blackwell Global, Z.com Trade and JustForex are others to increased their margin requirements for GBP pairs, due to possible hike in market volatility in the weeks prior and after the referendum. AMarkets and Admiral Markets have also joined in with hiher margin rates.  Meanwhile, others like 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.

Meanwhile, ThinkForex is the only forex broker so far to increase margins on GBP pairs.

 

 

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