As approaching Brexit referendum may cause significant volatility increase and liquidity problems in the market, a new bundle of FX brokers is added to the ever growing list of companies introducing amendments to their trading conditions, aiming to protect traders from related possible losses.
Second largest FX broker on Russia in terms of trading volume, ForexClub, lowers maximum leverage levels to 1:100, effective from 20th of June. Thus, margin requirements for open positions will be adjusted and may be stopped-out in case of equity shortage.
Additionally, ForexClub announces that maximum trading volume for all instruments is going to be limited by 10 lots (MT4), 100k (Libertex) or equivalent for Rumus and StartFX per customer.
FreshForex, an offshore broker, that recently cut margin requirements for all account types, also decided to reduce the leverage for all currency pairs with the British pound (GBP), Euro (EUR) and Swiss franc (CHF), as well as contracts for the European indexes (# CAC40, # DAX30, # ESTX50, # FTSE100).
New margin requirements of FreshForex will be calculated as follows:
- Accounts with leverage up to 1:1000 will be changed to 1:100 (1%);
- Accounts with leverage up to 1: 500 will be changed to 1:50 (2%);
- Accounts with leverage up to 1: 200 will be changed to 1:20 (5%);
- Accounts with leverage up to 1: 100 will be changed to 1:10 (10%).
Changes in the margin requirements will come into force on June 22, 2016 and will be remain in effect until the market closes on June 27, 2016. They affect both new transactions and existing transactions opened.
In order to protect clients’ positions over approaching UK referendum, Russia-based forex broker InstaForex made the following amendments to marginal requirements from June 20 until June 27:
- The maximum leverage level for all GBP crosses could be limited to 1:50.
- The maximum leverage level for EUR/USD, EUR/JPY, EUR/CHF, EUR/AUD, EUR/CAD, and EUR/NZD, as well as all exotic cross pairs involving the EUR could be limited to 1:200.
- The margin for some stock indices such as #N100, #DAX, and #FTSE could be increased several-fold from a standard requirement in case of higher volatility.
As a result of expected volatility over UK referendum, Australian-based ECN broker Pepperstone has also made some temporary changes to its trading terms for margins on GBP and EUR pairs, as well as certain index instruments. These leverage changes came into effect on 18 June and are effective until further notice.
The new maximum leverage/margin requirements for GBP pairs and UK100 is 50:1 and 100:1 for EU pairs and EU indices. As a general rule, Pepperstone provides its clients with high leverage levels, reaching 1:500.
TeleTrade, the third largest forex broker in Russia, and one of the few which obtained a license from the Central Bank of Russia (CBR), also warns that margin requirements can be increased for all the types of accounts and instruments during the period of June 20, 2016 to June 26, 2016.
Cyprus-based Alfa-Forex, which recently applied for a license from Russian CBR, warns of increased spread (especially with GBP and EUR), potential price gapping and margin requirements tightening as of June 20, without disclosing further details.
There are just 4 days left to the date on which will be decided whether the UK will leave the EU (aka Brexit) or remain in the union (aka Bremain). The referendum is probably the biggest currency event of 2016 and has the potential for causing extreme volatility in GBP and EUR crosses, irrespective of its outcome.