Saxo Bank, the leading Danish investment services provider and retail forex broker, announced it is hiking the margin requirements on certain single equity, index and fixed income CFDs, as well as certain forex pairs that are most likely to be affected by the outcome of the upcoming US presidential election.
More specifically, Saxo’s plans include raising the requirements for the most major forex pairs up to 2-3%, with RUB and MXN going to 10% and 15% respectively, while the minimum margin requirement on CFD Indices will be 4% based on market volatility and liquidity leading up to and through the election.
Saxo Bank will reinstate default margin rates once market conditions revert to normal.
”We take a dynamic approach to our margin policy by ensuring that our requirements correctly reflect the market risks at any given time,” said Claus Nielsen, Head of Markets at Saxo Bank. “As we enter the crucial few weeks ahead of the US election, and given the prominence of exposure to the US economy in our clients’ trading strategies, we want to ensure that our clients take advantage of trading opportunities with responsible leverage. ”
According to Nielsen the US election outcome might not create as much volatility as was created by UK’s Brexit vote, but a surprise outcome of the US election can create strong volatility, rapid price movements, potential for temporary illiquidity in certain stocks and indices, and to a lesser degree, in certain forex pairs. “ Analysts may be dismissing Trump’s chances, but the UK’s vote to leave the European Union has crystallised a growing anti-establishment mood that should not be underestimated, and there may be parallels in a protest vote for Trump”, notes Nielsen.
Last week another major forex broker – IG Group – also announced it is hiking its margin requirements.