Offshore forex broker OctaFX said on Wednesday it will reduce the maximum leverage requirements for the US30, NAS100, SPX500 indices in relation to the expected high volatility that could occur around the US presidential elections. Leverage for these instruments will be cut to 10:1 from 50:1 from 31 October until 14 November, 2016. This means that the minimum margin for the three indices will be increased to 10% from 2%.
The changes will apply only to traders who use the MetaTrader 5 (MT5) trading platform.
The broker noted that further changes in trading conditions are possible, depending on the market volatility.
OctaFX is a straight through processing (STP) forex broker, a brand of Octa Markets Incorporated, registered and licensed in St. Vincent and the Grenadines. It has a UK-licensed sister company. The broker offers a full range of forex solutions in more than 100 countries across the globe.
The broker is one of many to announce change in conditions prior to the US presidential elections. In the past 10 days, three other forex brokers said they will will introduce temporary margins for select instruments and two others announced intentions to do the same.
IG Group and CapitalIndex will increase margin for certain forex and contracts for difference (CFDs). IG Group will introduce new margins on 28 October and again on 4 November, while CapitalIndex will make changes on 3 November and on 7 November. Saxo Bank will also increase the margins for some forex pairs and single equity, index and fixed income CFDs. Meanwhile, Forex.com, a brand of US group Gain Capital, and FXOpen said they have not introduced margin changes, but it is most likely they will in the near future. Blackwell Global has also said that it will announce new trading conditions in the first week of November.
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.
In the context of the heated debates between the two main presidential candidates, Swissquote Bank launched baskets with forex instruments that it expects will be most highly affected if either Clinton or Trump wins. It has also made available to clients a predictive analytics tool to facilitate their trading choices concerning instruments potentially affected by the outcomes of the US elections.