Important announcement to Traders-Brexit
Change in trading conditions for several instruments from June 20, 2016 until June 27, 2016
The referendum on the United Kingdom’s membership in the EU is to take place on June 23, 2016.
|The referendum is broadly expected to cause turbulence in global financial markets no matter whether the vote will be for or against Brexit. Any developments in voting and any outcome will evidently make a profound impact on the forex market, first and foremost on the GBP and EUR currency pairs. Therefore, these instruments will be trading with record high volatility throughout next week.
To protect clients’ positions, the company decided to change marginal requirements for certain trading instruments on a temporary basis.
The following amendments are introduced for the week from June 20 until June 27:
- The minimum margin requirement could be raised to 2% for the following currency pairs: GBP/USD, EUR/GBP, GBP/CHF, GBP/JPY, GBP/AUD, GBP/CAD, and GBP/NZD as well as all exotic crosses involving the GBP.
- The margin for some stock indices such as #N100, #DAX, and #FTSE could be increased several-fold from a standard requirement in case of higher volatility.
- The minimum margin requirement could be raised to 0.5% for the following currency pairs: EUR/USD, EUR/JPY, EUR/CHF, EUR/AUD, EUR/CAD, and EUR/NZD as well as all exotic cross pairs involving the EUR.
As you are aware of higher volatility and big changes in marginal requirements, we strongly advise you to consider seriously that trading the above-mentioned instruments entails grave risks for the whole week.
Please adjust your trading strategy for the circumstances. You can either minimize or refrain from trading these instruments. Besides, make sure you have enough available funds in your account to maintain open positions.
We would like to warn you that such changes in trading conditions might not be final. In case of higher volatility and low liquidity, further restrictions could be imposed without advance notice.
Client Relations Department
What can you do to prepare?
Clients are advised to use extreme caution over the next few weeks while the volatility and uncertainty remains high. Any client’s wishing to trade should consider the steps below to mitigate the risks from the high volatility.
Increase capitalisation – Top up your funds in case margins are increased on products that you are trading and to prepare for the higher volatility.
Decrease exposure – Periods of heightened volatility demand lower exposure. Lower exposure will allow positions to move more out of the money without exceeding your defined risk limits. Also consider further limiting exposure to or ceasing trading on products that will be most affected by Brexit.
Use stop losses and wider stops – Using stops in the markets has never been more crucial. Unexpected moves are likely in the lead-up to the EU referendum, so make sure to protect positions with fixed stop losses.
Actively monitor your account – Both manual and automated Traders who have open positions between now and the 23rd of June are encouraged to monitor trades closely. Price action will likely fluctuate aggressively during this time, therefore it’s imperative to keep a tab on all positions taken.
Traders should also be aware that volatility may occur before the result is finalized, based on early vote counts and rumors, so stay safe, and good luck.