Do not invest more money than you can afford to lose.
Forex brokerage Admiral Markets has distribute summary compensations to clients who traded in GBP/USD and got affected by British pound’s sudden collapse on Friday, the broker said on Tuesday in a notice on its website. The compensation applies for holders of Admiral.Markets accounts only.
Holders of such accounts who had several affected orders on GBP/USD below executed during the flash crash at a price 1.17944 will receive a summary compensation. The reason for this is that Admiral Markets had a price spike around 1.11 on Live2 trading server.
“Although the above price reflects an order filled by an external counterparty and is not an error, we’re not happy to bind our clients to the result of this particular execution,” Admiral Markets’ notice read. “We’re seeing that the price of 1.17944, which was present on Live2 server the next minute after the spike (02:08 EET), is close to the middle of the general market consensus range of 1.15 – 1.19.”
The amount of the compensation will be calculated as the difference in points between the actual execution price of trades on GBP/USD during the spike and the price of 1.17944, multiplied by the point value per lot in account’s base currency and respective order’s volume in lots.
The broker broker did not disclose the combined amount of compensations or the number of compensated clients.
The “flash crash” happened shortly after midnight London time on 7 October, when within a couple of minutes the GBP crashed 6.1% to $1.1819 against the USD , reaching a historical 31-year low.
The exact cause of the event is not certain, but there are several scenario that might have triggered it. Some point at the big fat finger (an error by a broker or a dealer in entering a trade using a wrong rate or volume) as a possible cause of the crash. Others suggested the Sterling’s free fall was due to poor liquidity, while others believe the sharp price movement was the result of French President Francois Hollande’s pronouncement that the UK should “pay the price” for deciding to leave the EU.
The same day the flash crash took place, forex broker IG Group announced it was increasing the margin on all GBP currency pairs to 1% due to heightened volatility in forex markets.
Admital Markets is a collective brand of Admiral Markets UK, which is based and regulated in the UK, and its Australian sister company Admiral Markets Pty. Both brokers are units of Estonia-based Admiral Markets AS, part of the holding company Admiral Markets Group, which also includes Cyprus-regulated Admiralex.
