Swiss forex bank Dukascopy Bank said on Thursday it has joined a number of other forex service providers in changing conditions for trading instruments in the context of the upcoming US presidential elections. The difference is that the bank will introduce a temporary maximum leverage for all forex pairs.
On the day of the elections (8 November) currencies will be traded with a leverage lowered to the level of the over-the-weekend leverage conditions the bank offers. The change will affect trading accounts that close 7 November with balance exceeding $30,000 (or equivalent). The temporary leverage will be into effect until 9 November, but the bank can prolong that period, if necessary.
In addition, Dukascopy Bank will also lower the leverage on the USD/MXN pair to 10:1, starting 6 November before the market opening.
The changes are necessary due to the risks of high volatility, low liquidity and significant price gaps on the presidential election day. Account with less than $30,000 in balance that experience a significant increase of equity due to profit or deposit on Tuesday 8 November will be treated on a case-by-case basis.
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.
Dukascopy Bank is not the only forex broker to act precocious. 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, while OctaFX will reduce the maximum leverage requirements for the US30, NAS100, SPX500 indices to 10:1 from from 31 October until 14 November.
Meanwhile, Gain Capital, 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.
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.