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.
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.
ACY Securities Supports ASIC’s Product Intervention OrderGo to article >>
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 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.