After the Turkish lira made its biggest one-day retreat in eight years due to the coup attempt that took place in Istanbul on Friday, Forex brokers undertake appropriate risk management measures. With a view to the market volatility expected until situation in Turkey is settled, Blackwell Global announced it is temporarily hiking its margin requirements for certain TRY pairs.
More specifically, the broker said that margins for EURTRY and USDTRY will be increased 2 times, which means that the required margin for trade in these will be 1% instead of 0.5%.
The margin is the amount of funds that you should set aside in order to pay for any eventual losses from your open trades. Blackwell Global applied similar measures to help its clients manage the potential risk during the volatility and uncertainty of the Brexit vote.
As news on the coup attempt in Turkey spread on Friday, the Turkish lira made a 4.6% decline, and the Borsa Istanbul 100 Index (which had closed before the unrest began) dropped as much as 5.2% reaching its lowest point in three years.
Consequently, brokers are applying risk aversion measures to handle the volatile situation in Turkey. FxPro and ThinkMarkets have already changed their trading conditions accordingly, setting all TRY pairs to Close-Only mode, which basically means that traders will not be allowed to open new trades with the Turkish lira.
Blackwell Global has chosen another approach – to increase its margin requirements – a strategy that worked well for most forex brokers during the Brexit turmoil.
Blackwell Global is a STP broker, established in 2010, which now has a global reach, operating out of its offices in Auckland, Beijing, Hong Kong, Lagos, Limassol, London, Melbourne, Shanghai and Singapore. It is regulated and authorized by the Cyprus Securities and Exchange Commission (CySEC), as well as by the UK’s Financial Conduct Authority (FCA).