XM.com to Hike Margins on EUR Pairs as German Elections Approach

European elections have continued to play a central role across currency markets in 2017. With German elections coming this weekend, September 24, XM.com has joined a growing list of brokers in raising its minimum margin requirements in an attempt to safeguard clients against potential Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term.

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The German elections this weekend will see Angela Merkel fighting for the CDU/CSU to obtain a majority – however with an estimated 46 percent of Germans still undecided there remains the potential for a variety of different outcomes. Consequently, currency markets will be dialed into this event as it holds tremendous importance for the bloc.

Temporary measures

XM.com is taking no chances ahead of any electoral outcomes, which will be implementing several new margin requirements starting on Friday September 22, lasting until Monday September 25, 2017.

As such, all new and existing positions will see a margin requirement increased 1.0 percent, or 100:1 Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term for all EUR pairs. As the largest entity in the EU, any electoral surprise could hold sizable consequences for the single currency, which explains the precautionary measures.

Holding positions over the weekend is already risky enough due to concerns from geopolitical and global events that can take place when markets are closed. The margin increases reflect XM.com’s attempts to avoid any potential fallout for their retail clients, which could potentially lead to significant profit/loss scenarios for unprepared investors.

New Zealand garners focus

In addition, XM.com is also taking similar measures with regard to the upcoming New Zealand general election. Under the aforementioned timeframe, margins are being hiked to 1.0 percent for all NZD pairs, as well as gold and silver. This will affect all new and existing positions ahead of the September 23 election.