With the approach of the Italian referendum later this week, more and more brokers make changes to their trading conditions as a precautionary measure against the expected market volatility. Read on to find which brokers are making changes and what these changes are.
The Italian referendum is initiated by the country’s Prime Minister and 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 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. Post-referendum scenarios suggest that a No vote can provoke a new bank crisis in Europe, cause political instability and panic among investors. The event is sometimes called the Italian Brexit. The poll data and the vote itself are expected to affect global markets and cause increased volatility.
Trading 212’s changes cover many instruments
Trading 212, a brand of Avus Capital, will hike margins for several different instruments as a precautionary measure to the expected market volatility. The broker may also set a limit on the maximum quantities for some instruments when opening a new position. The new margins will come into effect at 1400 GMT on 2 December and will be as follows:
- Italian40-16Dec16 – from 1% to 5%
- $FRENCH40 – from 1% to 2%
- $GERMAN30 – from 1% to 2%
- $SPANISH35 – from 1% to 2%
- French40-16Dec16 – from 1% to 2%
- German30-16Dec16 – from 1% to 2%
- Dutch25-16Dec16 – from 1% to 2%
- EUSTOX50-16Dec16 – from 1% to 2%
- BPE – from 5% to 10%
- G – from 5% to 10%
- ISP – from 5% to 10%
- MB – from 5% to 10%
- MED – from 5% to 10%
- UBI – from 5% to 10%
- UCG – from 5% to 10%
Plus500 to make margin changes twice
Plus500 will increase margins on European currency pairs and indices, as well as on Italian stocks in two stages. On 30 November, the broker hiked to 3% the margin on the Italy 40 index and to 15% the margin rates for stocks in UniCredit, Intesa, Generali, B. Popolare, Mediobanca, UBI, Banca Generali, Intesa Sanpaolo.
Additionally, Plus500 will introduce on 2 December temporary margin of 1% for the EUR/USD pair and will hike to 0.5% the marig on some other EUR pairs (EUR/GBP, EUR/JPY, EUR/AUD, EUR/NZD) and some European indices (UK 100, France 40, Netherlands 25, Swiss 20, Spain 35, Norway 25, Greece 20, Denmark 20, Sweden 30, Europe 50, Poland 20, Austria 20, Germany 30).
Forex Club limits order size
The broker will limit the maximum total volume of a new position on several instruments as of 2 December. Following are the planned restrictions:
- Forex: 5 million lots
- Gold and Silver: 1 million lots
- Oil and gas: 500,000 lots
- Indices and Metals: 300,000 lots
- Shares: 100,000 lots
Further changes, such as increased margin, are possible, depending on the market conditions. Overall, the broker expects to turn back to normal trading conditions shortly after the referendum.
AMarkets alters margins on indices
AMarlket’s temporary margins will be implemented from 1 December until further notice and will apply for open and new positions alike across all account types. Around the Italian referendum, traders will be offered the following margins:
- DE.30, GER30 up to 2% (maximum leverage is 1:50, percentage 1000%)
- ITA.40, ITA40 up to 3% (maximum leverage is 1:33, percentage 1500%)
Orbex is still waiting
Orbex said it may or may not increase margins on some or all instruments. However, the broker did not provide details as to when such changes may occur or what instrument may be affected.
Blackwell Global to open later than markets
The broker warned that it will start pricing clients 5 minutes after the market opens after the referendum. Pricing will start at 1005 pm instead of 1000 pm GMT on 4 December.
The broker explained the decision with the observation that the first few minutes of market-opening after a significant news event tend to see increased volatility, price gaps, wide spreads and possible periods of thin liquidity.
Darwinex sets temporary margin on forex only
Darwinex will alter margins on 1 December at 2100 GMT. The temporary margins will be into effect until further notice, but the broker said normal conditions are expected to be resumed on 5 December. Temporary margins will affect existing and new positions and will be doubled to 1% for the following pairs: EUR/CAD, EUR/GBP, EUR/JPY, EUR/USD, and XAU/USD.
HotForex waits on to see how markets react
The broker did not engage with certain measures, but it said, depending on the market situation, it expects to introduce certain temporary measures, including increased margin requirements, close-only mode volume restrictions.
Others are also on the list
There are several other forex brokers that have announced planned changes in trading conditions in relation to the expected market volatility around the Italian referendum. FxPro, IG Group, ActivTrades and Admiral Markets have all said they are to implement temporary 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.