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Canadian Regulator Hikes Australian Dollar Margin Requirements

The latest move by the Canadian self-regulatory organization, IIROC affects traders of the Australian dollar against the greenback.

The Australian dollar (AUD) has become the latest currency to get under the radar of new margin requirements for retail forex traders in Canada. The self-regulatory organization in charge of the maximum permitted leverage on currency pairs has hiked the requirements on the AUD/USD currency pair to 3.3%, up from 3.0%.

Last month, the same level was applied to the EUR/USD pair after volatility across the market increased dramatically, leading to changes to the framework enforced by the Investment Industry Regulatory Organization of Canada (IIROC).

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Rapid swings in oil prices have led to increased fluctuations of the Canadian dollar’s (CAD) exchange rate, which is making it more difficult for local forex traders relying on high margin-level utilization to accordingly plan their systems.

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The Canadian regulatory environment is quite unique with its kind of floating margin requirement agenda. IIROC takes charge of setting margin requirements for different currency pairs.

With oil prices becoming very volatile during the past year, the Canadian dollar has began fluctuating more widely against its major counterparts. Only a couple of months ago the floor for leverage on the EUR/USD pair was 2 percent.

North American regulators have been taking a harsher stance on maximum leverage for years. Profitability of traders in the region according to the batches of statistics which have been published by watchdogs is much higher than in Europe. In this respect, the regulatory bodies in North America have been way more successful than their European counterparts.

In the final quarter of 2014, 35.3% of U.S. forex traders were in the black. The numbers from European countries such as France and Poland have been dramatically lower.

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