The list of forex brokers that intend to increase margin rates on GBP instruments as a preventive measure against market volatility has increased with well-known brands like Forex.com, FxPro, RoboForex, HotForex, FxOpen, and Orbex. These brokers have also made some other amendments to their trading conditions, as explained below.
Meanwhile, ETX Capital warned that, depending on the market conditions, it may be increasing margin rates on certain markets around the referendum, as well.
All brokers warned traders to be cautious and calculate whether they have enough funds in their accounts to meet the new margin requirements. If they don’t, chances are their positions will be automatically closed.
Forex.com also limits margins on indices and EUR , US instruments
US forex giant Forex.com has also taken part in the new higher margin trend. Starting after the market close on 17 June, the broker will offer trading in all GBP pairs and UK indices at margin rates of 3%, which is six times higher the current rates. In addition, minimum margin rates for EUR pairs and indices, as well as for US indives will be doubled to 1% . The brokerage noted that it may further increase margins if market in case of extreme volatility.
FxPro sets different margins for different GBP pairs
Initially, FxPro said it could hike margins, but until now it made no specific announcements. After the market close on 17 June until market close on 24 June, FxPro will increase the margins on all EUR pairs (except GBP/EUR) to 1%, as well as on European index and share instruments to 5% and 15%, respectively. The broker has split GBP pairs into three sub-categories, which will have different margins. Keep in mind that if the current margin of a certain instrument is higher than its temporary one, then the existing margin will prevail.
Following are the margins for GBP pairs by category:
- Major GBP Crosses – 2% margin
- Minor GBP Crosses – 4% margin
- Exotic GBP Crosses – 8% margin
RoboForex to discontinue the opening of orders on GBP pairs prior to hiking margins
RoboForex announced it will hike margins on GBP pairs, but prior to that it will stop making orders on such instruments. As of the market opening on 20 June until 24 June, the brokerage will switch to close-only mode for all GBP instruments on the MetaTrader 4 (MT4) and MetaTrader 5 (MT5) trading platforms, which means that no new positions with such instruments would be possible. In addition, no transactions with GBP instruments would be allowed in RAMM investment platform.
On 23 and 24 June, investors trading in GBP instruments will see various margin hikes, depending on the account type they use. As of 27 June, RoboForex will restore trading conditions to their usual. Following are the new temporary leverage requirements:
- The leverage for MT4 and MT5 ECN accounts will be 6 times less than the current level, or margins will be six times more that the current
- The leverage for MT4 and MT5 Standard and Cent accounts will be 20 times less than
the current level, or margins will be 20 times more than the current
- The maximum leverage for cTrader accounts will be limited to 1:50 regardless the current level, which means margin will be at 2%
As of the market opening on 20 June until 24 June, the brokerage will switch to close-only mode for all GBP instruments on the MetaTrader 4 (MT4) and MetaTrader 5 (MT5) trading platforms, which means that no new positions with such instruments would be possible. In addition, no transactions with GBP instruments would be allowed in RAMM investment platform.
Orbex to set margin level stop out at 50%
From 20 June, Orbex will temporarily set the margin level stop out at 50%. Starting 16 June, the broker will offer leverage of 25:1 for the GBP/EUR pair and 100:1 for all other symbols, which means that margins will be at 4% for all GBP and EUR pairs and at 1% for all others.
HotForex hikes margins across all forex pairs
In addition to increasing margins for GBP pairs to 4%, HotForex will also hike to 2% margins across all other pairs, as well as for gold instruments. The changes will be into effect with the market close on 17 June for both existing and new orders.
FxOpen hasn’t decided whether it would really hike margins
The broker has not set new specific trading conditions, but it warns it may increase margins and set wider spreads for GBP and EUR instruments, including indices, without further notice. Margins across these instruments may be hiked up to five times their current lebels. If the broker introduces new trading conditions they will apply through the week, starting with the market opening on 20 June. However, with the market opening on 27 June requirements will be reversed to their normal values.
A few of many…
Other forex brokers that have announced they would temporarily increase margins on GBP pairs and/or other tradable instruments around the UK referendum include One Financial Markets, Tier1FX, and Vinson Financials, as well as ActiveTrades , FXCM, Oanda and IG Group, FxPrimus, Invast Global, Blackwell Global, Z.com Trade and JustForex , in addition to AMarkets and Admiral Markets.
Meanwhile, some other brokers, including IFC Markets 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.
On the other hand, ThinkForex is the only forex broker so far to increase margins on GBP pairs.
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.