An increasing number of brokers are changing trading conditions concerned with the market reaction to the upcoming UK referendum. Lately, most of them refrain from setting exact date when they would lift the temporary limitations and resume to normal conditions, since the markets are very unpredictable. Most of them warn that in case of extreme volatility margins and other trade conditions could be further altered. This is just a precocious measure, but it also indicates that brokers are indeed concerned with how the markets will react to the UK vote.
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). Either scenario is 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 more information about the specific alterations of trading conditions that brokers plan to introduce:
XM to hike margins on weekend only
The broker will hike the margin on all currency pairs and gold and silver to 1% during this weekend only. The temporary changes will be into effect from 17 June (0300h GMT+3) until the market opening on 20 June. It will not make any changes to the trading conditions in the week of the referendum.
WForex says binary options could also be affected
The broker will significantly hike margins across all GBP pairs in the week of the referendum. Standard trading conditions will return on 27 June. In case of high market volatility, instruments with GBP and EUR can be transferred to close-only mode. Moreover, some expirations can be unavailable on the accounts for binary options trade, as well as PayOut interest rate can be decreased for the assets with GBP.
Following are the temporary margin requirements for WForex clients:
W-PROFI and W-CENT accounts:
- All fixed pairs with GBP will have a margin of 2%
- All crosses with GBP will have a margin of 4%
- All crosses with GBP will have a margin of 5%
- All fixed pairs with GBP will have a margin of 4%
Z.com Trade to keep temporary margin on EUR/USD until 1 July
The broker announced its temporary margin requirements will be into effect in the period from 19 June until the market close on 1July. The margin will be 1% and will apply for the EUR/USD pair only.
Fibo Group to change margins for MT4 Fixed, MT4 Floating, M4 NDD, and cTrader STP accounts
Fibo Group will change margins from 20 June until further notice for many tradable instruments and the rates will defer on the account type traders use. Furthermore, starting on June 20, all instruments may be switched to close-only mode in case of high market volatility. Following is more information about the new trading conditions for the different accounts:
cTrader STP and MT4 NDD accounts:
all trading symbols will have a margin of 2%
MT4 Fixed and MT4 Floating accounts:
- all trading symbols will have a margin of 2%
- the following currency pairs will be switched to close-only mode: AUD/DKK, AUD/SEK, AUD/ZAR, CAD/CHF, CAD/MXN, CHF/NOK, CHF/SEK, EUR/CZK, EUR/DKK, EUR/HUF, EUR/PLN, EUR/SGD, EUR/ZAR, GBP/DKK, GBP/NOK, GBP/SEK, GBP/SGD, GBP/ZAR, NZD/CHF, SGD/JPY, USD/CZK, USD/HUF, USD/PLN
- S/L orders can be executed with slippage
MRG Forex warns stop orders are converted to market orders
From the opening on 20 June until further notice, MRG Forex will increase margins for select GBP and EUR pairs by three times and by four times for XAU/USD. In case of high market volatility, margins could be further increased.
The broker warned that Stop Loss orders are not guaranteed to be filled at order level since Stop orders are converted to Market orders once triggered, and dislocations in available liquidity could result in significant slippage on Stop orders.
FXOptimax sets new margins but are they temporary?
The broker has hiked from 16 June margins by two times for GBP/USD, EUR/GBP, and EUR/USD pairs and by three times for GBP/JPY and EUR/JPY. The broker did not explain whether this was a temporary change and whether it is related to the UK vote.
Real Trade’s tempotaty trading conditions to apply for select forex pairs
Select GBP and EUR pairs will be traded with a margin two times higher than the standard and will be quoted with spreads ten times higher than the regular. The changes will be into effect from 20 June until 27 June and will apply for the following pairs: EUR/USD, GBP/USD, EUR/AUD, EUR/CAD, EUR/CHF, EUR/GBP, EUR/JPY, EUR/NZD, EUR/SGD, GBP/AUD, GBP/CAD, GBP/CHF, GBP/JPY, GBP/SGD.
Grand Capital to not offer leverage for GBP, EUR, CHF pairs
Grand Capital said it plans to close trading in the following European and British indices futures and metal futures: AEX, FCE, FDAX, FESX, FSMI, FSTX, FTSE, GC, HG, PA, PL, SI.
Parallel to this, it will hike margins for GBP pairs to 7% and for EUR and CHF instruments to 4%. The broker will also hike margins for spot metals to 3% and for currency futures by 10 times. Meanwhile, return rates on binary options will be decreased threefold. In case of high volatility and low liquidity levels, more instruments can be shifted to Close Only mode.
The changes will be implemented on 20 June, but it was not specified when standard conditions will be resumed.
IC Markets yet to tell when standard conditions will resume
The broker will hike to 2% the margins for GBP pairs and UK100 index and to 1% for EUR pairs and European indices. These trading conditions will apply from 21 June until and will be resumed to normal as soon as the risks from Brexit have subsided, whenever that is.
LMax Exchange sets new margins on forex, CFDs, gold
The broker will raise margins for the following instruments:
- all GBP currency pairs to 10%
- all EUR currency pairs to 5%
- European Equity Index CFDs to 10%
- non-European Equity Index CFDs to 5%
- spot gold and gold mini to 3%
These margins will be applied after 1800h on 23 July and will not be changed until the market conditions allow it. LMax Exchange noted that it may further change trading requirements and that changes may persist over the weekend of 25-26 June.
OctaFX to additionally hike margin for GBP pairs on vote day
All GBP and EUR pairs will be traded with margin of 1% and 0,5%, respectively, startng from 23 June until 27 June. On 23 June, the day of the UK vote, margin on GBP pairs can be further increased to 2%. Margins could be changed additionally depending on the market volatility.
FXTM to trigger close-only mode
FXTM was not very specific in what trading conditions it would change around the UK referendum and in what way. It said it would switch trading to close-only mode for specific or all instruments and that the margin requirements would be adjusted to the market conditions. The broker pointed to 23 June and 24 June as the most critical days.
Vantage FX switches certain GBP, EUR, USD pairs to close-only mode
Earlier, Vantage FX said it will increase margins in two stages and now it added that from 20 June certain currency pairs would be available for trading in close-only mode. These are GBP pairs GBP/CHF. GBP/JPY, GBP/NZD, and GBP/SGD; EUR pairs EUR/AUD, EUR/CHF, EUR/JPY, EUR/NZD, EUR/TRY, EUR/SGD, SUR/GBP; as well as USD pairs USD/SEK and USD/NOK.
Weltrade also joins in
The broker will hike margins across all GBP pairs by 20 times and will set margin for CFDs on UK100 index to 20% from 19 June until further notice. It warned it may further change margins or trigger close-only mode for select instruments based on market conditions.
Many other forex brokers have also announced announced margin changes in the days prior and after the UK referendum.