The recent wave of brokers changing their trading conditions on cryptocurrencies appears to be gaining momentum. IC Markets announced that its margin requirements for crypto CFDs have been raised from 5% to 20%. The changes will be applied to both new and existing positions, and the broker has issued a message to its clients to check the impact of these changes on their respective trading accounts.
According to the IC Markets blog, all of these changes will be implemented “at market close on Wednesday the 20th December 2017 22:00 GMT.”
Over the past year, brokers have been active in adapting to increased demand from investors for crypto trading within their CFD and forex portfolios. Some brokers were eager to answer the call for the relatively new instruments by adding Bitcoin into their active lists of assets.
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Withdrawing from Crypto
However, recent concerns over proper risk management procedures are causing some brokers to back down from currently offering crypto CFDs. While some brokers are taking steps to limit the maximum exposure for each trader, others are going further by stopping trading on crypto CFDs altogether.
Since many of the blockchain currencies have been trending almost exclusively in an upward trajectory, a one-sided market has been created in which a great deal of traders are holding long positions and profiting from the dramatic price increases that have recently engulfed the industry. This trend, along with a lackluster risk management procedural system, produces a scenario that intensifies the pressure within brokerages to manage their existing exposure properly.
On Monday night, Think Markets acted in comparable fashion, by announcing that trading on cryptocurrencies has been stopped until further notice. Similar reasoning was provided as the cause for the move, adding that “pricing and trading will resume upon the return of liquidity and price stability.”