IG Group said on Wednesday it intends to increase margin rated for certain forex and contracts for difference (CFDs) instruments ahead of the expected volatility as we draw closer to the US presidential elections. The broker will introduce temporary margins on 28 October and again on 4 November.
In the forex segment, as of 28 October pairs containing the Mexican peso (MXN), South African rand (ZAR), Brazilian real (BRL) and South Korean won (KRW) will have a margin of 5% and crosses with the Turkish lira (TRY) will be available with a margin rate of 3%. Meanwhile, on 4 November (3pm UK time) margin rates on the majors – US dollar (USD), Euro (EUR), Japanese yen (JPY), and Canadian dollar (CAD) will have a margin of 1%.
The broker will hike on 4 November margins for the following markets , as well:
Wall Street – 1% margin
S&P 500 – 1% margin
US Tech 100 – 1% margin
Russell 2000 – 1% margin
Germany 30 – 1% margin
France 40 – 1% margin
FTSE 100 – 1% margin
EU Stocks 50 – 1% margin
Gold – 1% margin
US Banks – 10% margin
US Healthcare/Biotech – 10% margin
European Banks – 10% margin
US Treasuries – 0.75% margin
IG Group noted that margins could further be increased if necessary. No details were provided.The broker did not specify when margins are to recover to their normal rates, either.
The broker recommended clients to monitor the positions closely at all times and ensure they have sufficient funds in the trading account to cover opened positions in the event of a significant market move.
The US presidential elections will take place on 8 November, 2016. The main candidates to win the elections are Democratic nominee Hillary Clinton and her Republican rival Donald Trump, against whom many high-profile republicans have turned their backs on due to the numerous scandals and blunders he has been involved in. The markets are expected
to react big time to the elections, regardless of the outcome. Pre-election debates are already affecting the markets. We’ve seen high volatility in any sectors of the financial markets.
IG Group operates worldwide with offices in 15 countries. It is regulated by the UK’s Financial Conduct Authority (FCA), but its subsidiaries are also regulated by the relevant authorities in the countries where they operate. It is also a licensed bookmaker by the UK’s Gambling Commission.
Earlier this month, the broker also increased margins on all British pound (GBP) pairs over the heightened volatility in forex markets resulting from the currency’s sudden collapse, aka flash crash.