Retail brokers have continued taking a cautionary approach ahead of next week’s  Brexit  Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minister Boris Johnson was elected Prime Minister the following month, who was well-known as a headstrong Brexit supporter. While the United Kingdom was predicted to leave exit the EU by October 31st, 2019, the U.K. Parliament sought out a deadline extension that delayed voting on the new deal. Following Boris Johnson’s reelection, Brexit occurred on January 31st, 2020 at 11 pm Greenwich Mean Time. Brexit Creating Ongoing Issues in with EuropeWhile the United Kingdom is in a transition period following its departure from the EU, the U.K. is negotiating its complete trade relationship with the EU, which is the United Kingdom’s largest trade partner. Terms of this trade agreement must be met by January 1st, 2021.Should terms of this trade agreement take longer than the projected resolution date of January 1st, 2021 then the U.K. must acquire an extension no later than June 1st, 2020. Failure to do so will result in the U.K. is subject to tariff and host rule changes exercised by the E.U. This situation is referred to as the “no-deal” Brexit and should this occur the consequences could result in a significant fallout of the U.K. economy. For the past few years, many banks and lenders operating previously in the UK had been given passporting rights to the European continent. The lingering uncertainty caused by Brexit resulted in many of these lenders relocating their European headquarters within continental Europe. Read this Term vote that could potentially unleash waves of volatility across foreign exchange and the financial markets. The latest provider exercising such contingency measures was Swiss forex bank and brokerage firm Dukascopy, which will see a change in their margin schedules.

Starting from today at 18:00 GMT, and extending until further notice, Dukascopy will increase margins on all GBP crosses and the UK stock index. Specifically, the broker reduced its maximum leverage to 1:30 for GBR.IDX/GBP, BRENT.CMD/USD, LIGHT.CMD/USD and GBP related FX instruments. Preferring to exercise on the safe side rather than incur any woes, the reduced leverage applies to all trading accounts without exception.

British lawmakers are set to vote on Prime Minister Theresa May's Brexit deal on Tuesday, January 15 with only two months left before the UK is set to leave the European Union.

As such, retail brokers and online venues such as Admiral Markets and Vantage FX are demanding higher cash balances from their clients for transacting in sterling and UK shares ahead of setting out the terms of the EU divorce.

Brokers are looking to protect themselves and their customers from any potential sharp market shifts that have the potential to wipe out account balances before trades can be cut. Beside raising leverage, many of them also make other amendments to their trading conditions, such as increasing stop out levels or restricting positions on certain instruments.

Geneva-based FX firm also left the door open to additional changes as needed, pending any unforeseen outcomes, but it estimates to return to normal conditions on Wednesday, January 16.

Many retail brokers still remember the brunt of the franc’s  Black Swan  Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this instance, the SNB abruptly decided to abandon the Swiss franc (CHF) currency peg with the euro, convulsing markets. In particular, the aforementioned cap was designed to keep the franc pegged at 1.20 to the euro in a bid to shield exporters and mitigate deflationary pressure. With the removal of this peg, the rate plunged to 0.86 francs per euro, before ultimately recovering slightly.The resulting move led to total wash outs of positions and margin calls that stressed brokers and traders alike. The aftermath led to an ongoing debate over negative balance protection and other lingering effects on the FX industry and has remained controversial ever since.Other Black Swan EventsIn addition to the SNB, other examples of Black Swan events include the US housing market crash in the aftermath of the 2008 financial crisis, the hyperinflation of Zimbabwe in which inflation rates peaked at 79.6 billion percent and the dot-com bubble of 2001.More recently, many experts have posited whether the outbreak of Covid-19 can be characterized as a Black Swan event, given its seismic influence on equity markets in March 2020. Ultimately, there is no uniform consensus on the pandemic being a Black Swan event given the crisis is still ongoing. A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this instance, the SNB abruptly decided to abandon the Swiss franc (CHF) currency peg with the euro, convulsing markets. In particular, the aforementioned cap was designed to keep the franc pegged at 1.20 to the euro in a bid to shield exporters and mitigate deflationary pressure. With the removal of this peg, the rate plunged to 0.86 francs per euro, before ultimately recovering slightly.The resulting move led to total wash outs of positions and margin calls that stressed brokers and traders alike. The aftermath led to an ongoing debate over negative balance protection and other lingering effects on the FX industry and has remained controversial ever since.Other Black Swan EventsIn addition to the SNB, other examples of Black Swan events include the US housing market crash in the aftermath of the 2008 financial crisis, the hyperinflation of Zimbabwe in which inflation rates peaked at 79.6 billion percent and the dot-com bubble of 2001.More recently, many experts have posited whether the outbreak of Covid-19 can be characterized as a Black Swan event, given its seismic influence on equity markets in March 2020. Ultimately, there is no uniform consensus on the pandemic being a Black Swan event given the crisis is still ongoing. Read this Term in 2015. Interactive Brokers, IG, LCG and CMC all suffered losses, while Alpari UK went bankrupt and FXCM had to get a rescue from Jefferies parent Leucadia.