Brokers Are Bracing Once Again for Volatility Over Grexit Fears
- With a critical referendum on Greece's response to its creditors coming on Sunday, traders and broker must manage their risks.
It seems that the Greek debt saga is not going to let FX risks managers rest anytime soon. Yet again brokers are forced to issue emergency warnings to clients about upcoming Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term due to news coming out of Greece.
On Sunday, July 5th, the Greek people will vote for or against the deal offered by its creditors, which can cause great disruptions in European markets. The country's far left Prime Minister, Alexis Tsipras, supports the no vote, angering the EU leaders and IMF executives with whom he should have negotiated for a mutual agreement.
Under these circumstances, brokers need to find a way to prevent any potential extreme volatility on euro pairs and the absence of 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 from reeking havoc on their balances, the way the SNB crisis did.
Last Friday, we saw exactly the same situation causing FXCM, Rakuten, XTB and others take measures to reduce risk over the weekend. Today more brokers are sending out similar warnings to clients about necessary preemptive actions.
Today's Actions
IC Markets says that in order to protect against any uncertainty and to ensure uninterrupted trading environment, "we may take action and limit the trading in EUR pairs, this may include limiting EUR based pairs to "close-only" or reducing the leverage before market close this Friday, any changes will also apply to pre-existing positions." The broker also requests that clients review their positions and ensure they have sufficient margin to maintain them, taking into consideration the possibility of an increase in margin.
Admiral Markets notified its clients that, today at 18.00 GMT, margin requirements on all instruments available for trading will be increased by a factor of two. This double margin policy will be reviewed again on Sunday, July 5th, at 22.15 (GMT). Additionally, market spreads will increase beyond their normal size, and there is an increased chance of order slippage.
XM announced that, from 3 hours before market closure, the maximum leverage for all accounts will be temporarily set to 50:1 thus increasing the margin requirements to 2%. The change in margin requirements will apply both on pre-existing positions and on new orders. This temporary measure will be waived on Monday, within 2 hours from market opening.
Similarly, FXPro decided to increase margin requirements to 2% for euro crosses, G20 currency crosses and precious metals. However, unlike XM these new margin requirements will only apply to new positions that are placed between Friday to Monday.
It seems that the Greek debt saga is not going to let FX risks managers rest anytime soon. Yet again brokers are forced to issue emergency warnings to clients about upcoming Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term due to news coming out of Greece.
On Sunday, July 5th, the Greek people will vote for or against the deal offered by its creditors, which can cause great disruptions in European markets. The country's far left Prime Minister, Alexis Tsipras, supports the no vote, angering the EU leaders and IMF executives with whom he should have negotiated for a mutual agreement.
Under these circumstances, brokers need to find a way to prevent any potential extreme volatility on euro pairs and the absence of 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 from reeking havoc on their balances, the way the SNB crisis did.
Last Friday, we saw exactly the same situation causing FXCM, Rakuten, XTB and others take measures to reduce risk over the weekend. Today more brokers are sending out similar warnings to clients about necessary preemptive actions.
Today's Actions
IC Markets says that in order to protect against any uncertainty and to ensure uninterrupted trading environment, "we may take action and limit the trading in EUR pairs, this may include limiting EUR based pairs to "close-only" or reducing the leverage before market close this Friday, any changes will also apply to pre-existing positions." The broker also requests that clients review their positions and ensure they have sufficient margin to maintain them, taking into consideration the possibility of an increase in margin.
Admiral Markets notified its clients that, today at 18.00 GMT, margin requirements on all instruments available for trading will be increased by a factor of two. This double margin policy will be reviewed again on Sunday, July 5th, at 22.15 (GMT). Additionally, market spreads will increase beyond their normal size, and there is an increased chance of order slippage.
XM announced that, from 3 hours before market closure, the maximum leverage for all accounts will be temporarily set to 50:1 thus increasing the margin requirements to 2%. The change in margin requirements will apply both on pre-existing positions and on new orders. This temporary measure will be waived on Monday, within 2 hours from market opening.
Similarly, FXPro decided to increase margin requirements to 2% for euro crosses, G20 currency crosses and precious metals. However, unlike XM these new margin requirements will only apply to new positions that are placed between Friday to Monday.