Analysis: Donald Trump’s Win Hands Brokers One of the Best Days in 2016

Foreign exchange and CFDs brokers appear to be weathering the rollercoaster of volatility rather well

The election of Donald Trump as US president is likely to cause the best day ever in terms of trading volumes for a number of brokerages. While the competition for the higher trading volumes ever will be tough with Brexit earlier this year and the Swiss National Bank debacle in January 2015, the day of this U.S. election is a solid contender.

Donald Trump’s election was seen by the markets as not such a bad outcome

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Financial markets have reacted violently to Donald Trump’s win with the U.S. dollar being sold off across the board and global stock markets tanking swiftly. The Asian session saw trading volumes at major brokerages equaling their best trading day in October.

With the start of European trading however, the scales have began shifting. Donald Trump’s election was seen by the markets as not such a bad outcome, especially in tandem with the corporate tax rates cuts that he promised before the election.

In all fairness, should Donald Trump’s rhetoric on China subsides and he doesn’t choose to build a wall with some of the biggest trading partners of the U.S. he has a chance to dramatically shift the direction of policy with the support from a republican majority in both the Senate and the House of Representatives.

Massive FX Volatility

We have become accustomed to FX trading rollercoasters and this time its not any different. While the U.S. dollar has initially tanked across the board, it has largely recovered at the time of the London open. Hilary Clinton’s defeat does not seem too scary for the stock markets for now too. After futures on the NASDAQ have hit limit down (which means they lost 7 percent), the contract is currently lower only by 2.5 percent.

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Electronic Communications Network (ECN) for foreign exchange trading Fastmatch, which is reporting its trading volumes in real time has managed to equalize the metrics for the best day of last month about 30 mins into the London open. The company has taken adequate measures to protect its clients from excessive volatility, just as many brokers in the industry have done.

Stock Markets Rollercoaster

European stock markets are tentatively liking what Donald Trump has become in the aftermath of his election as the 45th President of the United States. After Hilary Clinton has called the President Elect to congratulate him on his win, he has stricken a more balanced tone and has praised Hilary Clinton’s public service record. The move was a 180 degree turn from the “lock her up” rhetoric that has become common at Trump’s rallies.

The main test for the markets will be during the U.S. session when market participants from the U.S. return to their screens

A number of brokerages are keeping the heightened margin requirements that were introduced in the run-up to the U.S. election. With the stock markets continuing their wild swings, brokers are likely to refrain from reducing collateral requirements in the near term.

The main test for the markets will be during the U.S. session when market participants from the U.S. return to their screens.

Dodd-Frank Legislation

Donald Trump has been actively supporting the abolishment of Dodd-Frank, however it hasn’t been clear what does he have in mind as a replacement. The bill that was implemented in the aftermath of the financial crisis has been limiting competition in the financial industry, especially for retail FX brokers in the U.S..

Granted, this will not be on the top of the priorities list of The Donald’s reign, but his intentions to replace Dodd-Frank with “something better” could fare well for some parts of the financial industry that have been over-regulated. Finance Magnates has already expressed the hopes of the industry in our April Fool’s Day post.

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