June 13, AtoZForex – As the Brexit referendum on the June 23rd is approaching, not only the officials of the Eurozone countries, but also retail brokers are monitoring the development of the events. The latter group is mostly interested in any potential sharp market shifts due to their field of activity. So what are the Forex Brokers Brexit risk management strategies?
Every broker has to develop its own Brexit risk management plan in case of unpredictable market changes. As it appears, retail trading platforms currently are requesting higher amounts of margin on products related to UK equities and sterling from their customers. Remembering last year Swiss franc volatility events, most of the brokers are demanding their clients to increase their cash balances for transacting in sterling and UK shares.
What are the Forex Brokers Brexit risk management strategies?
Following this trend, AtoZForex team presents you the full list of Forex Brokers Brexit risk management strategies. Our team has asked all of the brokers to provide a short description of their risk management activities ahead of the Brexit referendum. We have analyzed the broker’s risk management activities and found out that the majority of brokers has taken measurements. Yet, some of the Forex Brokers will not change their leverage. Nevertheless, below is the list of brokers that do have taken measures in regards to leverage, margin requirements, and overall risk management.
AETOS Capital Group Brexit Risk Management
Ahead of the EU referendum, AETOS Capital Group has prepared its UK branch. According to the Global Marketing Manager at AETOS Capital Group, Shunyu Li informed AtoZForex that the following two measures has been taken: “First, AETOS (UK) will increase the margin requirement for specific products following the market close on Friday 17th June 2016 (GMT) until the market close on 24th June 2016 (GMT) or until market conditions resumed normal, in order to manage situations such as unusual market volatilities and liquidity shortage.”
“And second, from the market close on 17th June 2016 (GMT) until the market close on 24th June 2016 (GMT), AETOS (UK) will restrict investors in adding new positions on the following financial instruments: UK100 (U.K. FTSE 100 Index); XAUEUR, XAGEUR; DXY (U.S. Dollar Index). During the restriction period, the client can only close it’s existing positions on the above mentioned products while unable to add new positions. Any outstanding orders in client’s account will be cancelled upon the market close on 17th June 2016 (GMT), however the Stop-Loss and Take-Profit orders will not be affected by the above adjustments.”
Admiral Markets Brexit Risk Management
In response to AtoZForex’s inquiry, Admiral Markets‘ Marketing Project Manager, Dmitri Nikland has informed that there will be temporary changes in Admiral Markets’ trading terms. Lasting from the session opening on Monday, 20 June until 12:00pm EET, 27 June:
“The margin requirements for all currency pairs with the pound sterling (GBP) and index CFD will increase by five times on Admiral.Markets and Admiral.Classic accounts and by two times on Admiral.Prime accounts. Furthermore, new leverage rates will be introduced for Admiral.Markets, Admiral.Prime and Admiral.Classic accounts.
Opening new positions using exotic currency pairs and the less liquid cross rates with GBP will be restricted for the duration of the above terms. The Close Only mode will be enabled for the following instruments: GBPCAD, GBPNZD, GBPCZK, GBPHKD, GBPMXN, GBPPLN, GBPSGD, GBPTRY, GBPZAR. Additionally, internal fund transfers from or to GBP accounts via Trader’s Room may be temporarily disabled on Thursday, 23 June, starting from 12:00 am until 12:00 pm EET.”
ADS Securities Brexit Risk Management
Whether traders are sitting on the peripheries or taking a view, one thing is certain and that is that all eyes will be on the potential volatility surrounding the vote. The opinion may be that on the 23rd June and the following days there will be a number of opportunities created across the markets however with volatility becoming more and more rife participants need to be aware of the risks that could adjoin the vote. AtoZ Approved Forex broker ADS Securities London is dedicated to ensuring its clients have access to the appropriate risk management tools in order to mitigate as much risk as possible. Those who were in the markets over last year’s SNB will remember the split second change in liquidity that plagued the marketplace and will no doubt be looking at which systems will best protect them.
Clients of ADSSL can use stop loss orders to limit the potential downside to their trade, alongside this a virtual private server can help keep your systems running if you can’t afford your screen the time. Making sure you don’t over leverage your account is something that should be taken with great consideration, ADS Securities London allows its clients the ability to adjust the margin to suit the account. Lastly, as a company, we’ve also done our best to protect our clients with changes to margins in the markets that are likely to be affected; we’ve upped margin requirements on GBP pairs to 5%, EUR pairs to 2% and the UK100 index to 2%. All of this should mean that those trading with ADSSL who are risk on will be able to make the most of the referendum.
AFX Group Brexit Risk Management
According to Eliza Alexandrou, AFX Group has taken proper risk management measures to secure the clients’ trading activity ahead of the referendum. Through its AtoZ Approved Forex Broker brand STO, various measures have been implemented to minimize the effects of potentially increased volatility in the financial markets:
“In our effort to protect our clients’ funds, we will temporarily increase margin requirements by 100% for all GBP crosses and the FTSE 100 Index at the market opening on the 10th June 2016. Please note that depending on the market conditions, margin requirements for the aforementioned instruments or for any other instruments offered by STO might be additionally modified, upon appropriate notice.
We suggest that you act accordingly to ensure that your accounts are well capitalized to maintain any open orders, when the above changes are applied.”
Alpari Brexit Risk Management
In a recent announcement that has been sent to AtoZForex, Alpari has noted that: “Due to the Referendum in the UK regarding membership of the European Union, the margin requirements for several instruments will undergo some changes. From the 20th of June, 2016, the following margin requirements will be in place and remain so for the FX Special group:
- for standard.mt4 and pamm.standard.mt4 accounts – 1:25 (without volume limits);
- for ecn.mt4 and pamm.ecn.mt4 accounts – 1:10 (without volume limits);
- for pro.ecn.mt4 and ecn.mt4 accounts the maximum number of orders will be 500.
From 20th June, 2016, for all EUR and GBP pairs, margin will be calculated using the leverage for the FX Special group. From this date, the following changes to leverage for all instruments will be in place:
- for pro.ecn.mt4 and ecn.mt5 accounts, including PAMM Accounts – 1:10 (without volume limits);
- for nano.mt4 accounts – 1:25.
We will notify you of these special terms ending at a later date. In case, of high volatility and low liquidity, instruments could be set to Close Only and Stop and Limit levels may also be widened.”
AvaTrade Brexit Risk Management
Regardless of the Brexit voting results. According to David Ben Oren, AvaTrade believes in increased volatility in most markets right before and after the Brexit referendum:
“AvaTrade is offering a spectacular Cash Bonus for all GBP FX Pairs traded during the week of the EU Referendum – between 20th to 24th June.** All Margin Requirements are subject to further increases without additional warning prior to or after the 23rd /24th June following the BREXIT Referendum voting and results.” On Friday, 17th June @ 09.00 GMT – AvaTrade will make the following adjustments to our margin requirements:
MT4 and AvaTrader platforms:
- All GBP FX pairs = 2%
- All other FX pairs = 1%
- Gold = 1%
- FTSE = 4%
- S&P, DJ, Nasdaq = 1%
- AvaOptions platform:
- All GBP FX pairs = 5%
- All other products = 2%
Axiory Brexit Risk Management
In regards to the Brexit, the Head of Front-office, David informed that Axiory is going to take a number of measures to reduce the risk of their clients and also reduce the risks exposed to Axiory, all in accordance with our LPs:
“That means we will reduce the leverage (margin requirement) on all GBP pairs 5x and on all European currencies pairs 2.5x for the whole Brexit week. This way we believe we stay out of risk and Brexit should not affect our clients. All of our clients were already informed about this planned change.”
Axitrader Brexit Risk Management
In a short and concise message from Axitrader’s Sales Associate, Peter Rowe clarified that: “There will be more information nearer the time, but we will probably be targeting 20:1(5%) on GBP and other pairs.”
Darwinex Brexit Risk Management
According to Bianka from Darwinex, the broker has taken the following steps in order to protect their customers from volatility spikes due to the UK referendum: “Please be informed that our margin requirements are changing on 16 June 2016 at 06:00 GMT as described in the latest news section in our official website. The new margin requirements will remain in force until further notice.
In this connection, please note that the new margin requirements will affect both EXISTING and NEW positions. Kindly review your position sizing and please make sure your account is funded appropriately ahead of the (presumably) upcoming volatile market conditions.”
Dukascopy Brexit Risk Management
Having the Brexit referendum approaching, the Support department of Dukascopy has taken these measures: “Dukascopy plans to temporarily decrease maximum leverage on GBP currency pairs to 1:30 and to 1:10 on GBR.IDX index CFD as of Wednesday, 22 June 2016 18:00 GMT. In effect this means that on the week of the”Brexit” referendum the over-the-weekend leverage mode (1:30) for GBP instruments will be applied 2 days earlier than usual. Exception is made for GBR.IDX where the special leverage mode will be 1:10.
It is expected that the special leverage requirements will be removed on Sunday at the market opening, 26 June 2016. However, Dukascopy reserves the right to prolong or reconsider the special leverage conditions for GBP instruments if found necessary based on the market reaction to the results of the vote.”
Forex.com Brexit Risk Management
In regard to AtoZForex’s inquiry, Timothy Wzorek has commented that Forex.com has sent out correspondence to their clients regarding the upcoming changes at Gain Capital. According to Timothy, these changes will take effect after the market closes on June 17th, 2016:
“Minimum margin rates on GBP crosses and UK indices will increase from 0.5% to 3%. This includes EUR/GBP. Minimum margin rates on EUR crosses, EUR indices, and US Indices will increase from0.5% to 1%. Whereas, the minimum margin requirements may be higher for larger position sizes.“
FXCC Brexit Risk Management
The support team of FX Central Clearing (FXCC) announced to protect the interests of both their Clients and FXCC’s against any unforeseeable events and minimise the effects of potentially increased volatility in the market. FX Central Clearing will temporarily implement the following preventive measures:
“Effective on the market open June 13th, the margin requirements will be increased by 200% for all GBP pairs and 100% for all EUR pairs.Please note that increased margin requirements will also apply to pre-existing positions. You can use our customized Brexit Margin Calculator to help you calculate the new Brexit Margin Requirements. Effective on the market open June 20th, the Margin Call level will be raised to 150% and the Stop Out level will be adjusted to 100%.
In the period prior to, during and after the Brexit vote, FXCC will be closely monitoring the market volatility to assess and decide whether additional preventive measures must be implemented (such as increasing margin requirements for other instruments, enabling the ‘close-only’ mode on certain/all instruments as well as restricted availability of trading of certain/all instruments).”
FxGrow Brexit Risk Management
According to the Marketing Director at FxGrow, Dagmara Handzlik, FxGrow will perform the following activities ahead of the Brexit referendum:
”Due to the uncertainty hovering around how BREXIT outcome would impact markets and given our experience with relevant instances i.e SNB event, we believe increasing margin is one of the safeguards a brokerage could utilize to protect its clients’ interest against any sharp market shifts. Therefore, FxGrow has decided to double margin requirements for Forex and precious metal pairs and increase margin requirements for all CFDs, in such the margin requirement for UK100.cfd will have 10% margin requirement, DE30.cfd will have 4%, and other CFDs will double to 2%. These changes were applied already on Monday 15th June and will remain effective until further notice.
This is in compliance with CySEC Circular 130, in which the regulator asked all CIFs to take precautions ahead the BREXIT event and to closely monitor the risks to which they are or/and their clients are/or could be exposed to and to take measures as necessary to minimize such risk. At the moment, we are not planning to impose any additional leverage restrictions.”
FXOpen Brexit Risk Management
In response to AtoZForex’s inquiry, the Head of Sales at FXOpen, Natalia Zakharova commented the following on FXOpen’s Brexit risk management activities:
”It will remain possible to trade EUR and GBP-based pairs, however, the margin requirements may be increased 5 times.”
More information will follow…
AtoZForex’s investigation into the Brexit Risk management continues, we are adding more to the list of Forex Brokers Brexit risk management strategies, as we’re still waiting for the replies of the other brokers in the market. We are convinced that Forex Brokers After Swiss Franc will never be the same and that there is a lot to learn from this issue. If your broker is not present on this list, please check the second list of brokers’ risk management strategies or the third list of Forex brokers that don’t change their leverage.
Still, if your broker is not present on any of these lists, then immediately contact your broker for an update on what their risk management activities are. Are they adjusting the leverage? Will they limit trading on GBP pairs? Prepare yourself for the market volatility amid a possible Brexit in the United Kingdom.
Your broker is not on the list? Contact AtoZForex editor team now!