Dukascopy Cuts Leverage to 30:1 Ahead of Brexit Volatility

Retail brokers have continued taking a cautionary approach ahead of next week’s Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term vote that could potentially unleash waves of volatility across foreign exchange and the financial markets. The latest provider exercising such contingency measures was Swiss forex bank and brokerage firm Dukascopy, which will see a change in their margin schedules.

Starting from today at 18:00 GMT, and extending until further notice, Dukascopy will increase margins on all GBP crosses and the UK stock index. Specifically, the broker reduced its maximum leverage to 1:30 for GBR.IDX/GBP, BRENT.CMD/USD, LIGHT.CMD/USD and GBP related FX instruments. Preferring to exercise on the safe side rather than incur any woes, the reduced leverage applies to all trading accounts without exception.

British lawmakers are set to vote on Prime Minister Theresa May's Brexit deal on Tuesday, January 15 with only two months left before the UK is set to leave the European Union.

As such, retail brokers and online venues such as Admiral Markets and Vantage FX are demanding higher cash balances from their clients for transacting in sterling and UK shares ahead of setting out the terms of the EU divorce.

Brokers are looking to protect themselves and their customers from any potential sharp market shifts that have the potential to wipe out account balances before trades can be cut. Beside raising leverage, many of them also make other amendments to their trading conditions, such as increasing stop out levels or restricting positions on certain instruments.

Geneva-based FX firm also left the door open to additional changes as needed, pending any unforeseen outcomes, but it estimates to return to normal conditions on Wednesday, January 16.

Many retail brokers still remember the brunt of the franc’s Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term in 2015. Interactive Brokers, IG, LCG and CMC all suffered losses, while Alpari UK went bankrupt and FXCM had to get a rescue from Jefferies parent Leucadia.