easyMarkets Defies Industry Safety Trend on Brexit

While Brexit ‎has prompted ‎many brokers ‎to reduce margin, easyMarkets commits to high leverage and other ‎conditions.

CySEC-regulated forex broker easyMarkets has announced to clients that it will be ‎‎applying the same margin requirements during the Brexit vote on June 23rd 2016. ‎The ‎interesting announcement comes while most forex 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. ‎

The company reiterated that during the EU referendum it will continue to offer its ‎‎traders 200:1 leverage, no slippage, negative balance protection, free guaranteed ‎stop ‎loss and fixed spreads on its GBP pairs, according to the update sent out ‎to ‎clients of easyMarkets today. ‎

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Commenting in the press release, Nikos Antoniades, CEO of easyMarkets, said: ‎“At ‎easyMarkets we will honour our promises to our traders just as we have done ‎during ‎every major market moving event. Just as our free guaranteed stop loss and ‎fixed ‎spreads protected traders during the CHF events of January 2015, so they will ‎‎protect them during the Brexit.” ‎

No one wants a repeat of what happened ‎

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, not just for pound and euro pairs ‎but ‎also for other U.K. ‎instruments, as memories of the SNB’s move are still embedded in their minds. ‎

The issue of British voters deciding whether or not to remain part of the European Union has become popular recently in the forex realm with every opinion poll ‎moving the ‎‎market quite a bit. Volatility in pound rates has soared before the ‎vote, with ‎one-month implied volatility in the GBP/USD pair rising last week to its ‎highest levels ‎in more than 7 years. Some analysts are predicting ‎losses of at least 20 percent ‎‎following a Brexit. ‎

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‎Lessons Learned

Forex traders, brokers, liquidity providers and other concerned parties seem ready ‎to ‎draw on lessons learned from memories of last year’s unexpected Swiss franc ‎‎volatility, after many platforms failed following ‎the decision announced by the SNB ‎to no longer peg its currency to the ‎euro. ‎

Market makers ‎booked millions of dollars of losses in a matter of minutes following ‎the shocking announcement. ‎ ‎Interactive Brokers, IG Group, London ‎Capital and ‎CMC all suffered losses while Alpari UK closed its doors and FXCM ‎had ‎to receive a ‎‎$300 million rescue loan from Leucadia. Saxo Bank’s net loss from the Swiss franc ‎black swan totaled $108 million.‎

The list of brokers demanding higher cash balances from their customers for ‎transacting includes OANDA which has lowered the maximum leverage available on ‎GBP pairs to 20:1 and on euro ‎pairs to 50:1, ‎starting from the market close on June ‎‎17, 2016‎.

Saxo bank hiked margin requirements on GBP pairs to 7%. In addition, Finance Magnates reported yesterday that ‎Forex.com will put in place temporary changes to its margin rate requirements after ‎the market closes this Friday. Minimum ‎margin rates for all UK indices and GBP crosses including EUR/GBP will increase at Saxo Bank ‎six-fold from 0.5% to 3%, and minimum margin rates for EUR crosses, EUR indices, ‎and US Indices ‎will be doubled from 0.5% to 1%. CMC Markets and IG Group, ‎among others, also announced similar changes earlier this week.‎

 

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