CySEC-regulated forex broker easyMarkets has announced to clients that it will be applying the same margin requirements during the Brexit vote on June 23rd 2016. The interesting announcement comes while most forex brokers have already ironed out their plans to protect themselves and their customers from any sharp market shifts that have the potential to wipe out account balances in an instant.
The company reiterated that during the EU referendum it will continue to offer its traders 200:1 leverage, no slippage, negative balance protection, free guaranteed stop loss and fixed spreads on its GBP pairs, according to the update sent out to clients of easyMarkets today.
Commenting in the press release, Nikos Antoniades, CEO of easyMarkets, said: “At easyMarkets we will honour our promises to our traders just as we have done during every major market moving event. Just as our free guaranteed stop loss and fixed spreads protected traders during the CHF events of January 2015, so they will protect them during the Brexit.”
No one wants a repeat of what happened
Apart from measures that have been taken by various providers to manage their exposure to risk, the majority of forex traders might make several adjustments to their trades or close their positions, not just for pound and euro pairs but also for other U.K. instruments, as memories of the SNB’s move are still embedded in their minds.
The issue of British voters deciding whether or not to remain part of the European Union has become popular recently in the forex realm with every opinion poll moving the market quite a bit. Volatility in pound rates has soared before the vote, with one-month implied volatility in the GBP/USD pair rising last week to its highest levels in more than 7 years. Some analysts are predicting losses of at least 20 percent following a Brexit.
Lessons Learned
Forex traders, brokers, Liquidity providers and other concerned parties seem ready to draw on lessons learned from memories of last year’s unexpected Swiss franc volatility, after many platforms failed following the decision announced by the SNB to no longer peg its currency to the euro.
Market makers booked millions of dollars of losses in a matter of minutes following the shocking announcement. Interactive Brokers, IG Group, London Capital and CMC all suffered losses while Alpari UK closed its doors and FXCM had to receive a $300 million rescue loan from Leucadia. Saxo Bank's net loss from the Swiss franc Black Swan totaled $108 million.
The list of brokers demanding higher cash balances from their customers for transacting includes OANDA which has lowered the maximum leverage available on GBP pairs to 20:1 and on euro pairs to 50:1, starting from the market close on June 17, 2016.
Saxo bank hiked margin requirements on GBP pairs to 7%. In addition, Finance Magnates reported yesterday that Forex.com will put in place temporary changes to its margin rate requirements after the market closes this Friday. Minimum margin rates for all UK indices and GBP crosses including EUR/GBP will increase at Saxo Bank six-fold from 0.5% to 3%, and minimum margin rates for EUR crosses, EUR indices, and US Indices will be doubled from 0.5% to 1%. CMC Markets and IG Group, among others, also announced similar changes earlier this week.
