Canadian Dollar’s Volatility Elicits Margin Requirement Hike in Select Pairs

Canadian self-regulatory organization, the Investment Industry Regulatory Organization of Canada (IIROC), has updated a list of FX margin trading requirements for the CAD, following robust 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.

Outside of the SNB crisis, the last such notable announcement from the IIROC came back in January with the rapid depreciation of the Canadian dollar (CAD), given the collapse of oil prices. While 2015 has seen the price action of the USD/CAD maintain a steady ascent, the maintaining of interest rates by the Bank of Canada (BoC) helped fortify the beleaguered currency.

The IIROC has issued a newly revised table for all margin requirements of different currency pairs, with the notable change in the 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 ratio of the CAD to the Japanese yen, which was prepared as of March 5, 2015.

Starting from March 11th, the margin requirements on the CAD/JPY pair will be raised from 3.3% to 3.70%.

The list is updated by IIROC whenever there are higher-than-normal changes to the margin requirements in the most popular traded currencies. More specifically, this occurs when a given currency exceeds the volatility threshold that is set out in Dealer Member Rule 100.2, as stipulated by the IIROC.

An updated list of the new margin requirements can be read below: