Multi-license forex brokerage FxPro said on Wednesday it will set a temporary margin of 1% for select European spot indices in relation to the expected market volatility during the Italian constitutional referendum later this week. The changes will come into effect at 1000 am (UK time) on 2 December, 2016, and will affect only new positions.
The broker did not disclose when trading conditions are expected to come back to normal.
“In the days preceding the 2016 Italian Constitutional Referendum, which will take place on Sunday, December 4, 2016, as well as in the days following the event, market volatility is expected to increase significantly as a result of the impact that the vote may have on the country’s future in the Eurozone,” the broker said in a statement.
The new 1% margin conditions will apply to the following indices:
- Germany 30 (DAX) Spot Index
- Swiss 20 Spot Index
- UK 100 Spot Index
- Euro 50 Spot Index
- Finland 25 (Helsinki 25) Spot Index
- France 40 Spot Index
- Holland 25 Spot Index
- Spain 35 Spot Index
- Sweden 30 (OMXS 30) Spot Index
- Belgium 20 Spot Index
- France 120 Spot Index
- Germany 50 (MDAX) Mid Cap Spot Index
- GerTech 30 (TecDAX) Index
- Nordic 40 (OMX 40) Spot Index
- Norway 25 (OBX 25) Spot Index
- Poland 20 Spot Index
- Portugal 20 Spot Index
- UK Mid 250 Spot Index
Please consider that the broker uses dynamic leverage as a type of risk management tool.
FxPro also noted it may further change to trading conditions if the market conditions require it, as well as to refuse the opening of new positions and to enable close-only functionality. If needed, it will also allow fixed spreads to float to reflect underlying market conditions.
The Italian referendum will take place on 4 December, 2016. It will decide whether the country’s constitutions would be amended and, depending on the outcome, might mean the resignation of the Prime Minister. It is also seen as a significant event that would show the future of the EU, of which Italy is part. Exit poll results will be released at the same day. The poll data and the vote itself are expected to affect global markets and cause increased volatility.
IG Group and ActivTrades also announced last week they were planning margin changes for instruments that are expected to be affected by the referendum vote. In addition, XTB UK will introduce temporary changed concerning margins on select instruments as a precautionary measure ahead of the referendum.
FxPro is the collective brand name of FxPro UK Ltd., an entity regulated by the UK Financial Conduct Authority (FCA), and FxPro Financial Services Ltd., which is licensed by the Cyprus Securities and Exchange Commission (CySEC) and the Financial Services Board (FSB) of South Africa.