Online forex brokers Vantage FX and MTBankFX, the forex broker arm of Belarus-based lender MTBank, said on Tuesday they will introduce new temporary margins due to the expected dynamic market conditions with the approach of the US presidential elections.
Vantage FX will offer with the market opening on 3 November temporary margin requirements for certain forex of 3% and for commodities and indices of 4%. The broker did not specify when trading conditions will be resumed. Temporary margin rates will apply for the following instruments:
- Forex Pairs (new margin 3%): AUDUSD, EURUSD, GBPUSD, NZDUSD, USDCAD, USDJPY, USDCHF, USDNOK, USDSEK + USDZAR and USDMXN close only.
- Commodities (new margin 4%): XAUUSD, XAGUSD, CL-OIL
- Indices (new margin 4%): FTSE100, DAX30, DJ30, Nikkei225, SP500
The news comes a day after Vantage FX said it may increase margins and move instruments to close-only mode for key instruments ahead of the US elections. It said at the time it might take these actions to mitigate the risks associated with the expected market uncertainty, but had not decided on specific new conditions.
MTBankFX, on the other hand, will offer temporary trading conditions for account with balance exceeding $30,000. The broker will cut the maximum leverage for all forex pairs on 8 November, the day of the elections. In addition, it will also lower the leverage on the USD/MXN pair to 10:1 with the opening of the market on 6 November. The tempoprary conditions will be into effect until 9 November, unless the market conditions require otherwise.
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. Trump is currently one percentage point behind Clinton in the latest polls, making the markets even more uncertain.
Other brokers are also intorducing temporary trading conditions ahead of the elections. Alpari will have new margins for the different account types it offers during the 7-11 November period. Dukascopy Bank will hike on the day of the elections margins for all forex pairs traded via accounts with balance exceeding $30,000. In addition, it will increase margins for the USD/MXN pair, starting 6 November before the market opening. IG Group and CapitalIndex will also 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 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, 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.
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.