27 June, AtoZForex – After a hectic weekend, the markets opened today again and it was clear that the world is still in shock over the EU referendum results in the UK. Last Friday, the worst GBP performance was seen post the majority of the Britons voted for the UK to leave the EU. A GBP performance we haven't seen since the cable crash of the Black Wednesday. Today, the post Brexit market environment is still in chaos, from the market movement perspective. As a result, traders around the world are asking questions about their broker. In response, AtoZForex has reached out to Capital Street FX for their opinion.
In an interview with Lisette Norman, more clarity has been provided upon Post Brexit Capital Street FX operations.
Q1: What was the biggest achievement for Capital Street FX in the 48 hours after the EU referendum results?
- Lisette – Hello Everyone. Friday really has been a “fat-tail” development in the markets for all market participants. We think our biggest achievement has been to ensure that our operations continued uninterrupted through the course of the developments between Thursday and Friday and thorough preparation beforehand helped us ensure that client trading operations and capital adequacy were not affected.
Q2: Which risk management precaution did Capital Street FX take?
- Most of our Liquidity Providers had increased margins and imposed position limits weeks ahead and we ensured that we scanned client accounts and trading histories to ensure that we had the right risk models in place. We ensured that we reached out to clients most likely to be affected by the volatility, and worked with them much earlier than the actual event to ensure that both client and company were adequately prepared for any possible scenario. This included working with clients to limit their exposure to assets most likely to be the major centres of risk as well as ensuring adequate equity in the accounts.
Q3: How did Capital Street FX platform react as the Brexit news hit the market? Did you face any lack of liquidity?
- We are proud to state that other than an understandably higher spread on the most volatile pairs, we did not face any lack of liquidity or performance issues with our platform. On the contrary, we had sophisticated traders engaging in high frequency trading throughout the day without any reported issues.
Q4: Are you able to share any insights about your clients' operations? Can you share the average lot size entered for GBPUSD and the average profit loss for this pair?
- The average lot size on the GBPUSD for the day was 1.7 lots. Our average for the month so far is 0.65 lots per trade per account. The average profit/loss per trade on the GBPUSD has been $350.00.
Q5: What are the most traded instruments for Capital Street FX at the moment?
- GBPJPY and GBPAUD.
Q6: Which Brexit risk aversion action will Capital Street FX take for this week?
- We do not have a large exposure to the GBP at the moment. We have our compliance team monitoring client exposure to the GBP to ensure that we are in touch with clients to maintain equity adequacy levels in client accounts, as well as moderate position size going into the weekend.
Q7: What are your expectations for the new trading week?
- In our opinion, this is the beginning rather than the culmination of a long journey that may have many curves and bends before we reach any particular destination. With the noises being made within the UK by Scotland, as well as petitioners requesting the parliament for a new referendum, and hesitation from the Leave Camp in indicating any clear plans on what happens next, we think that a UK inside the EU or outside the EU may not be very different in terms of its relationship with the bloc. And If we may stick our neck out and take a risk, we would not like to discount the possibility that the UK may never actually leave the EU at all!
Q8: Do you have any recommendations for traders?
- We would recommend that traders not completely familiar with how volatile the currency markets can be at times of systemically risky events like the Brexit, should currently avoid assets that are directly in the line of fire. It may be relatively less demanding to trade in other markets and there are lots of opportunities out there. And the golden rule that is never to be forgotten. Always Have An Entry And Exit Plan - Please Use A Stop Loss Always.
Thank you for your time and input Lisette Norman. We are happy to deliver the news about brokers' performance after the recent historic trading day, where AtoZForex followers have been able to stay on top of the market news.
Through this interview, Capital Street FX has been able to provide the public more clarity about their operations, performance and risk management activities in the last 48 hours. If you are curious about the current situation of the other brokers and their opinion of the current market, please check AtoZForex's list of Forex Brokers Post Brexit operations and risk management activities.
Do you have more questions for Capital Street FX? Don't hesitate to post the question in the comment section below.