Poor Liquidity Next Week Forces Some Brokers to Introduce "Close-Only"

Some brokerages that are taking measures to prepare for the referendum on whether the U.K. is going to leave the European Union are forced to take measures which may prove to be unpopular with clients. Vantage FX has announced this morning in a client note that the firm is going to put some pairs into 'close only' mode of operation.

The referendum has caused many brokerages to dramatically reduce leverage with both market making and straight-through processing (STP) brokers affected. Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers have also increased their margin requirements in order to protect their own exposure to market risk.

In the case of Vantage FX almost all pairs involving the euro and the British pound are affected with a close-only mode of operation.

Following is the list: GBP/CHF, GBP/JPY, GBP/AUD, GBP/NZD, GBP/SGD, EUR/GBP, EUR/AUD, EUR/CHF, EUR/JPY, EUR/NZD, EUR/CAD, EUR/TRY, EUR/SGD, USD/NOK, USD/SEK. The only two EUR and GBP pairs that are not affected are the EUR/USD and the GBP/USD.

Most brokerages in the industry are preferring to play it safe and prevent themselves from taking too much risk, despite risking an outcry from clients. Vantage FX has announced in a message to clients that it reserves the right to extend the close-only requirement to other pairs.

Goldman Sachs has issued a note to its clients warning them that the volatility across the foreign exchange markets is virtually warranted. Regardless of the result from the referendum, the British pound is likely to move sharply in either direction. The investment bank has estimated that the GBP could fall as much as 11 per cent in the case of a vote for 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. Goldman also foresees a drop in the value of the euro totaling 4 per cent and a rally in the Japanese yen totaling 14 per cent.