Analysis: Some Retail Brokers are Sending Mixed Brexit Messages to Clients

While the bulk of the industry increase margin requirements, marketing campaigns are inviting clients to trade the event.

There are a number of retail forex and CFDs brokers out there that have been sending conflicting messages to their clients in recent days. While most of the companies in the industry have implemented changes to tackle the prospective risks from erratic moves in the British pound (which are already happening), a number of those same firms are inviting clients to trade the event.

The new world of online trading, fintech and marketing – register now for the Finance Magnates Tel Aviv Conference, June 29th 2016.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

While the companies are preparing for the massive volatility which is likely to stem from the event, marketing messages across Facebook, Google and other platforms are conflicting. Direct emails and social media adverts are tempting forex traders to take risks around the event.

Easy Money vs. Heightened Risks

With the classic approach of promising easy money, the marketing departments of companies are inviting their clients to take on risk, while risk management units know that the same risk can ultimately result in losses for a brokerage.

Suggested articles

LegacyFX’s Robust Tool Offering Setting it Apart from CompetitionGo to article >>

The reality is that nobody knows what the outcome of the referendum on Thursday will be, and many brokerages could get their systems stress tested in the uncharted waters of low liquidity and extreme volatility.

In order to keep their reputation solid, retail brokers should rather focus on the long term profitability of their clients. Instead of marketing departments soliciting clients with alleged easy money opportunities, they should rather focus on the matter only after the prospective black swan is behind us later this week.

Considering the situation, the current status of the brokers in the industry should continue to accentuate the risks, rather than the profit opportunities.

Major banks are calling in their traders after a relaxed weekend, as the liquidity situation on the British pound markets since the start of the week has dramatically deteriorated. The GBP rallied across the board on Monday and Tuesday as the polls that are tracking the mood of voters have shifted closer towards the Remain camp.

Got a news tip? Let Us Know