FXCM Raises Margin Requirements for Selected FX Pairs Ahead of US Election

US-based retail broker FXCM has announced that it will temporarily increase Margin Requirements Margin Requirements A margin requirement is defined as the minimum equity sum that investors must keep in their margin account preceding a trading transaction. Margin requirements may be referred to as maintenance margin, minimum maintenance, or maintenance requirement. This is a requirement for broker trading in any asset class.In terms of equities, the New York Stock Exchange (NYSE) and Financial Industry Regulatory Authority (FINRA) have a fixed margin requirement of 25% of the sum value of the securities presen A margin requirement is defined as the minimum equity sum that investors must keep in their margin account preceding a trading transaction. Margin requirements may be referred to as maintenance margin, minimum maintenance, or maintenance requirement. This is a requirement for broker trading in any asset class.In terms of equities, the New York Stock Exchange (NYSE) and Financial Industry Regulatory Authority (FINRA) have a fixed margin requirement of 25% of the sum value of the securities presen Read this Term from 1 percent to 2 percent for selected currency pairs with effect from Friday 4th November in anticipation of market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term ahead of next week's US presidential election.

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According to the statement, the company will reduce margin requirements back to pre-election levels as soon as market conditions permit. The thirteen currency pairs that will see higher margins of 2 percent include EUR/USD, USD/JPY, GBP/USD and USD/CAD.

Mexican peso

The USD/MXN margin requirements will rise from 4.6 percent to 10 percent, the USD/SEK margin will increase from 3 percent to 6 percent and the USD/NOK will move from 1.5 percent to 3 percent.

The new margin levels will come into effect from 5.00 pm EDT (21.00 GMT).

FXCM joins a list of retail brokers that have raised margin requirements in the run up to the election. With the Mexican peso being the barometer of Trump’s fortunes, a victory would see a substantial depreciation in its value. Hence, the move has been implemented as the outcome still poses a high risk.

Early last year, both FXCM and a number of other brokerages were hit hard by the Swiss National Bank's sudden move to scrap its cap on the value of the Swiss franc versus the euro.

The move caused the euro to suffer its biggest-ever one-day fall against the franc, which fell 18 percent for the session and lost around 30 percent on an intraday basis. The firm lost over $200 million following the SNB's action.