Few would argue that the Brexit is a non-event. MEP Alexander Lambsdorff said that a European Union without Germany or France is “completely unimaginable” and Spanish Prime Minister Mariano Rajoy said that a Brexit would be “negative for everybody”.
In less diplomatic speak, some economic commentators are forecasting an era of irreversible doom for the UK in case the British electorate vote in force to exit the EU.
Marshall Gittler, Head of Investment Research at FXPRIMUS
In the words of Marshall Gittler, Head of Investment Research at FXPRIMUS: “Even if the US elects President Trump, that decision could be reversed four years later, but the impact of Britain leaving the EU would last much, much longer." That makes it an enormous decision.
There is no doubt in anybody’s mind that the Brexit is a huge market mover, responsible for erratic and unpredictable volatility on the Sterling currency pairs.It brings opportunities for the more intrepid traders to take risky positions, with the potential of making – or losing – ’loadsa money’ as the case may be.
Going prudent
But just how important is it for partners who may not necessarily be trading themselves, whose profitability hinges on the successes of their clients who may very well be ‘trading the news’ during the referendum period?
Maybe Brexit after all will be a non-event for IBs and Affiliates. Let’s examine some reasons why:
Brokers
Brokers are taking precautionary measures to prevent clients from excessive risk. We at FXPRIMUS, for instance, like many other brokers, are making adjustments to trading conditions in order to avert another CHF-style disaster. With this in mind, it may be business as usual for IBs and Affiliates.
Traders
Traders too are becoming wary of volatility. Still reeling from the SNB shock events in 2015, brokers and traders alike are wary of excessive volatility, and may prefer to trade on more predictable currency pairs. Where FXPRIMUS was unaffected by the drastic effect on the CHF in 2015 and on other currencies, some other brokers with weaker Risk Management systems in place couldn’t cope and went into administration shortly afterwards.
Referring partners therefore may be advising their clients to avoid the Sterling pair and focus on ‘safe haven’ instruments.
Making the most out of it
This being said, how can you as a partner maximize from the Brexit? All eyes in Europe will be on the UK on 23 June, referendum day. No matter which way the traders will trade, this event is simply too big to ignore.
Our recommendation to IBs and Affiliates is to maximize from the publicity and interest in Brexit to foster an interest in new clients to trade, and to gently nudge existing traders to join in on the action.
Jump on the Brexit bandwagon: Ask your broker for banners to your sizes and specifications that you can promote on your website. See here our example.
Speak openly about the Brexit: Run a seminar or a webinar discussing the Brexit and incorporating / avoiding trading Sterling pairs into client trading portfolios. FXPRIMUS can help you promote your events via our dedicated events page.
Be there for your clients: If you are an IB who is trading on behalf of his/her clients, consider communicating your Brexit trading strategy if you have one – or why you don’t have one – with your clients. We have a dedicated section on our education pages for our IBs who wish to share information with their clients.
One way or another, this week will be hectic. Let us know how you and your clients have experienced it.
This article was written by Helen Astaniou, PR & Marketing Communications Manager at FXPRIMUS.com. Contact her at helen.astaniou@fxprimus.com.
