Z.com, the UK-arm of the leading global broker GMO Click based in Japan, today announced a temporary adjustment of its margin requirements due to the UK’s referendum vote on EU membership on June 23rd, as the company expects high volatility in pairs such as the EUR/USD which it noted in its circular to clients.
The news follows after the company made a similar announcement for its GBP-related currency pairs last week including in GBPUSD, GBPJPY and EURGBP which were changed to 2% margin or 50:1 leverage, and followed now with a 50% cut on leverage for EUR/USD to 100:1 as volatility may spread to additional currencies and securities.
The company added that while market conditions may present some trading opportunities, clients should be aware that wider spreads and reduced liquidity may ensue during high periods of price volatility in markets.
An increasing number of FX brokers have made similar changes as the UK referendum vote approaches and as reported by Finance Magnates in recent days and weeks in related posts and in the list below:
Going Past the Great Wall: Things to Consider When Entering the Asian MarketGo to article >>
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EUR/USD margin temporary change
As a result of these expectations Z.com said that it will reduce the leverage ratio for its EUR/USD pair offering down to 100:1 leverage which increases the margin requirement to 1%, effective from the opening of trading on June 19th UK time and through the close of trading on July 1st 2016.
After the aforementioned period on July 1, leverage will resume to 200:1 thus bringing margin requirements back to 0.5% from the temporary adjustment of 1% for the EUR/USD pair, as well as the prior temporary measures being lifted for the GBP-related pairs that were changed last week ahead of the Brexit vote.
The company reminded clients that if their current account balances don’t have sufficient margin for any open positions that would be affected when the new changes occur, they could face an auto-closeout due to the temporary decrease in leverage during Brexit week. The news follows just days after Z.com launched an affiliate offering as reported by Finance Magnates in an earlier post this week.