XM Follows FX Brokers in Raising Margins Temporarily Ahead of Brexit Vote
- The latest margin changes as Brexit approaches comes from FX broker XM.
Online FX broker XM today announced that it will implement temporary margin changes in an effort to protect clients from the financial market turbulence anticipated due to the United Kingdom’s EU referendum Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis vote next week.
XM explained in an update to clients that from 23:00 (GMT+3) this Friday June 17th, it will increase margin requirements on all its currency pairs to 1% which will effectively reduce 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 to 100:1, as well as on gold and silver. The company noted that all other instruments it offers will not be affected. In recent days, Finance Magnates has reported on a slew of FX brokers that have joined in the trend of hiking margins ahead of Brexit week.
Weekend purge
Interestingly, this measure will be waived prior to the market opening on Monday June 20th and required margin levels on all currency pairs including gold and silver will revert back to each client’s specific account setting, meaning that the changes could purge over-leveraged traders without enough free margin to meet the weekend requirements.
It appears that this approach may help the firm reduce its clients' exposure going into this weekend, as clients will need to tie up additional margins to meet the 1% requirement or face position closures, whereas next week traders can take a refreshed approach. XM did add that it may announce additional measures early next week with regard to the referendum day as June 23rd approaches.
XM noted that clients who wish to keep open positions in the affected instruments over the coming days should make sure that their accounts have adequate funds in order to avert potential margin calls and/or stop-outs in their trading which occurs when equity falls to or below the 20% margin level and trades are closed out one-by-one starting with the largest loss.
Online FX broker XM today announced that it will implement temporary margin changes in an effort to protect clients from the financial market turbulence anticipated due to the United Kingdom’s EU referendum Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis vote next week.
XM explained in an update to clients that from 23:00 (GMT+3) this Friday June 17th, it will increase margin requirements on all its currency pairs to 1% which will effectively reduce 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 to 100:1, as well as on gold and silver. The company noted that all other instruments it offers will not be affected. In recent days, Finance Magnates has reported on a slew of FX brokers that have joined in the trend of hiking margins ahead of Brexit week.
Weekend purge
Interestingly, this measure will be waived prior to the market opening on Monday June 20th and required margin levels on all currency pairs including gold and silver will revert back to each client’s specific account setting, meaning that the changes could purge over-leveraged traders without enough free margin to meet the weekend requirements.
It appears that this approach may help the firm reduce its clients' exposure going into this weekend, as clients will need to tie up additional margins to meet the 1% requirement or face position closures, whereas next week traders can take a refreshed approach. XM did add that it may announce additional measures early next week with regard to the referendum day as June 23rd approaches.
XM noted that clients who wish to keep open positions in the affected instruments over the coming days should make sure that their accounts have adequate funds in order to avert potential margin calls and/or stop-outs in their trading which occurs when equity falls to or below the 20% margin level and trades are closed out one-by-one starting with the largest loss.