According to some client notes to white labels seen by Finance Magnates reporters, white label clients of FXCM have been informed about changes in margin conditions next week. Customers of the brokerages that are using FXCM’s turnkey solution for trading on foreign exchange and CFDs will have to adhere to some substantially higher margin requirements starting from the 16th of June.
The hikes are affecting a number of currency pairs beyond the British pound. Since the possibility of an exit of the United Kingdom from the European Union is likely to affect the integrity of the institution itself, the hikes are also affecting pairs that include the euro.
Margin requirements hikes will also affect a number of CFDs including the UK FTSE 100 index, the German Dax, Bunds, oil, natural gas and copper. While the latter batch of this list is not directly affected, volatility across financial markets is likely to spread beyond the obvious pairs and currencies.
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The changes will take affect on the 16th of June and will remain in place until the normalization of market conditions in the aftermath of the referendum. The coming weeks are likely to result in thinner liquidity across a variety of asset classes with the British pound pairs already becoming jittery in the past week.
Tuesday morning saw sterling spiking across the board with a fat finger trade blamed for the occurrence. The lack of appropriate risk management amongst traders that are using high leverage is the main reason why a number of brokers including FXCM incurred substantial losses during the Swiss National Bank crisis back in January 2015.
A large number of brokerages have introduced new margin requirements for their clients to address the prospective volatility in the aftermath of the U.K. referendum.
Following is a list of all the FX pairs that have been affected by the margin changes: EUR/USD, GBP/USD, EUR/AUD, EUR/CAD, EUR/GBP, EUR/JPY, EUR/NZD, GBP/AUD, GBP/CAD, GBP/CHF, GBP/JPY, GBP/NZD.