CHF Mishap Results in CFD Brokers Altering Their Margin Requirements on Swiss Share CFD
- CFD providers were forced to amend their margin requirements for CFDs on Swiss stocks. London-based CFD firm, Ayondo, increased the margin on Swiss equity CFDS to 10% as market volatility drove down prices.
Financial services firms offering CFDs on Swiss instruments were playing with the lack 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 during the midst of one of the largest currency moves in the Swiss franc. The CHF's massive drop impacted its peers with shares and the benchmark SMI index faltering. As a result, CFD providers offering access to equity derivatives increased the margin requirements for traders.
Leading UK regulated broker-dealer, Ayondo, was one of the few providers that made amendments to its Swiss offerings. The firm increased margin levels on major Swiss equities traded as CFDs to 10%.
Margin alterations are common at CFD providers, today's move resulting in a number of currency brokers changing margins on CHF currencies. FxPro notified users that it had suspended trading on all CHF crosses. A similar practice at Exness which also reported complete suspension of orders.
Maltese broker, FXDD, sent a note to its clients describing the after effects of such an act, stating: “As a result of this morning's announcement from the Swiss National Bank that it has discontinued its minimum exchange rate, and the extraordinary volatility in CHF currency pairs that ensued, we have been forced to fill client orders and positions in an extremely illiquid market.
Once we establish true market liquidity, all executed fills will be revisited. At this time, these orders will be revised and amended to more accurate levels. This may result in a worse execution rate than the originally filled level.”
Despite the markets taking a tumble some brokerages weathered the storm, UK CFD brokers, ETX and CMC Markets maintained margins on Swiss stocks. The main 25 stocks normal margin is between 5% to 8% depending on its market capitalization and daily trading range.
The latest FX moves highlight the vulnerability of brokers, traders and the interconnectivity between markets. For non-forex traders a move of today’s magnitude is a sign that Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term is essential in today’s market.
Financial services firms offering CFDs on Swiss instruments were playing with the lack 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 during the midst of one of the largest currency moves in the Swiss franc. The CHF's massive drop impacted its peers with shares and the benchmark SMI index faltering. As a result, CFD providers offering access to equity derivatives increased the margin requirements for traders.
Leading UK regulated broker-dealer, Ayondo, was one of the few providers that made amendments to its Swiss offerings. The firm increased margin levels on major Swiss equities traded as CFDs to 10%.
Margin alterations are common at CFD providers, today's move resulting in a number of currency brokers changing margins on CHF currencies. FxPro notified users that it had suspended trading on all CHF crosses. A similar practice at Exness which also reported complete suspension of orders.
Maltese broker, FXDD, sent a note to its clients describing the after effects of such an act, stating: “As a result of this morning's announcement from the Swiss National Bank that it has discontinued its minimum exchange rate, and the extraordinary volatility in CHF currency pairs that ensued, we have been forced to fill client orders and positions in an extremely illiquid market.
Once we establish true market liquidity, all executed fills will be revisited. At this time, these orders will be revised and amended to more accurate levels. This may result in a worse execution rate than the originally filled level.”
Despite the markets taking a tumble some brokerages weathered the storm, UK CFD brokers, ETX and CMC Markets maintained margins on Swiss stocks. The main 25 stocks normal margin is between 5% to 8% depending on its market capitalization and daily trading range.
The latest FX moves highlight the vulnerability of brokers, traders and the interconnectivity between markets. For non-forex traders a move of today’s magnitude is a sign that Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term is essential in today’s market.