As market turmoil shows no signs of letting up, the majority of brokerage firms are raising their margin requirements, mostly on oil instruments and stock indices, amid fears that spread of the coronavirus and an oil price war would continue to trigger further mayhem.
A week of energy chaos, where crude prices dropped 30 percent, has dragged global stocks and almost any other risk-correlated assets into a bear market territory and added new risks to the coronavirus-rattled markets.
As Finance Magnates reported earlier, many FX brokers said they would take special measures in anticipation of higher volatility and trading volumes. The announcements come as most online brokers have already ironed out their plans to protect themselves and their customers from any sharp market shifts that have the potential to wipe out account balances in an instant.
Apart from measures that have been taken by various providers to manage their exposure to risk, the majority of forex traders might make several adjustments to their trades or close their positions. The current geopolitical turmoil, energy wars, and coronavirus pandemic could swiftly have a knock-on effect on open trades, trigger stop-outs, and liquidate accounts as markets turn.
Forex traders, brokers, liquidity providers, and other concerned parties seem ready to draw on lessons learned from memories of 2015 unexpected Swiss franc volatility after many platforms failed when the SNB scrapped its fixed euro peg.
This article is designed to be an easy-to-understand guide that lists the margin and leverage changes across most of the key players in the trading industry. The tightening of the trading conditions was a mandatory step to help ensure that their clients are provided with better protection against the predicted volatility surrounding the next weeks and beyond.
You can find below a list of brokers that have updated their trading requirements, and more will be added as more news comes in.
Tickmill will be applying a close-only mode effective immediately for the following Indices: FRANCE40, ITALY40, SPAIN35, STOXX50, SWISS20, UK100, AUS200, HK50, JP225, AFRICA40.
In addition, the following instruments will be set to close only mode on Fridays from 22:00 Server time until Sunday market open: DE30, US30, US500, USTEC, WTI, and Brent.
ATFX Institutional Business Continues to Expand: Adding a New Prime BrokerGo to article >>
These measures will be in place until March 31st
Admiral Markets has set the following instruments to long-only trading modes:
1. Spain – IBEX35 index CFD (both cash and index futures based contracts) and share CFDs. The restriction expires at the end of the day on April 17th, 2020.
2. Belgium – Share CFDs. The restriction expires today after the session closure.
3. France – Share CFDs. The restriction expires today after session closure.
FXOpen decided to increase margin requirements by up to 5 times their normal level. The change affects currency pairs, indices, metals, and commodities and will take effect from March 17th until further notice.
Dukascopy is decreasing the maximum exposure limit on 11 instruments. The updated limit values (in contracts) are:
- XAU/USD – 3000
- USA500.IDX/USD – 1000
- USATECH.IDX/USD – 300
- USA30.IDX/USD – 100
- USSC2000.IDX/USD – 2000
- FRA.IDX/EUR – 500
- CHI.IDX/USD – 200
- DOLLAR.IDX/USD – 25000
- BUND.TR/EUR – 10000
- USTBOND.TR/USD – 10000
- UKGILT.TR/GBP – 10000
The limitation will enter into force as of this weekend, 14-15 March 2020 and remain in force until further notice.
Interactive Brokers is taking the following steps with immediate effect:
- Intraday margin discounts remain suspended until further notice.
- Liquidation deferrals: the buffer for activation of liquidations is currently 5%, but may be reduced further as market conditions warrant [Background: under normal market conditions IBKR usually delays liquidations for a period of time during the active trading session when an account is only slightly (less than 10%) under its financial requirements to allow clients to individually manage their risk reduction activities].
- Clients with positions having exposure to large moves in most asset classes (equity, energies, capital markets, forex, bonds) may expect higher capital requirements on short notice and should consider managing their risk and capital positions in their accounts to anticipate such changes.
Alpari told clients it might implement as a precaution on the next trading sessions the below temporary measures on EUR instruments:
- Switch to Close-only mode
- Leverage adjustments
- Trading restrictions
- Increased spreads
This also includes “hedged” positions, which, in case of spread increase, face the possibility of a Stop Out.
LiteForex warned traders of the possibility of wider spreads and price gaps for all FX pairs, oil, commodities, indices, crypto, and CFD on shares. Although the company didn’t make changes to their margin rates, they request accounts to be fully collateralized ahead of the weekend and in the coming weeks.