To Brexit or to Bremain? That is still the question

Yael Warman

In just three days time, Britain casts its vote on its future membership of the European Union. Leverate’s Yael Warman looks at how the retail FX industry is preparing for the referendum.

London, Canary Wharf from Thames

Will Britain exit or remain come June 23rd? That has been the question for weeks, since discussions began about whether Britain would remain as part of the European Union, or detach itself from it.

Nobody asked the people of Great Britain whether they wanted to be part of the EU, but now that the consideration to exit from it is on the table, the people are going out to the polls and everyone who has a vested interest in the results of the referendum has their eyes and ears stuck to the news outlets.

Both Forex traders and brokers have a lot to lose or win pending the Brexit outcome and that being the case, action is being taken on all sides in order to prevent a black swan- type crash come June 23rd.

A lot is being said to compare Brexit to the Swiss Franc mayhem of a year and a half ago and brokers around the globe are bracing themselves in similar ways.

While the possible effects of Brexit’s outcome in terms of volatility may be similar to those that occurred on January 15th of 2015, there is a world of difference between a sudden, unannounced black swan-type event and an event that has provided notice weeks in advance and allows both brokers and traders the time to plan and adjust their strategies.

Some experts assure that as long as brokers and traders have a sensible risk management strategy in place, there is no need for additional action, however, brokers have begun taking preemptive measures. We know that some of the big brokers around the world are making customers more aware of trading risks and increasing margin requirements.

OANDA for example, announced clients that it would be lowering its maximum available leverage on sterling pairs to 20:1 and on euro pairs to 50:1, while IG Group will increase its starting margin rates on all FTSE 100 contracts and pairs involving sterling and Saxo is increasing its margin level requirements to 7% for trades that involve sterling and 8% for trades of instruments within the FTSE 100. Other large brokerages like FXCM, TradersWay, Forex.com and PhillipCapital UK are also raising margin requirements.

But if you are a small brokerage, what should you be doing to protect you and your clients from potential losses?

Sami Mana, Chief of Staff at Leverate, the leading technology provider for the financial trading industry, weighs in: “In order to navigate the volatility that is bound to be brought by the Brexit outcome, brokers need to have good risk measures in place and optimize their levels for margin requirements and determine their maximum acceptable exposure. If you are a broker that does not have a dealing desk operating 24 hours a day, this is a good time to consider paying them overtime.”

“Design a Golden Sheet considering all the possible scenarios you can think of and IFTTTs (if this, then that). Increase the stop level of your traders. Consider lowering the maximum position amount. Iff you lack the financial backing to overcome a black swan event, consider setting the system on close only mode for certain crosses and asset, holding/delaying trading and perhaps even closing trading of certain instruments” concluded Mr. Mana.

Read this next

Digital Assets

US court greenlights IRS to track down crypto investors

A federal court has authorized the US Internal Revenue Service (IRS) to issue a so-called John Doe summons for taxpayers who may have failed to report and pay taxes on cryptocurrency transactions. 

Executive Moves

GCEX hires American Express’ veteran Marilu Revelli as marketing director

GCEX, a digital asset and FX technology platform for institutional and professional clients, has appointed Marilu Revelli to the role of Marketing Director.

Crypto Insider

Gate.io lists DeFiChain’s DFI token amid growing popularity

Bitcoin-based DeFi platform DeFiChain announced the listing of its native DFI token on Gate.io, one of the world’s leading cryptocurrency exchanges.

Digital Assets

Binance in discussions with Japan regulators to relaunch operations

Binance, the world’s largest crypto exchange by traded volume, is reportedly seeking a license to operate in Japan after its exit from the country four years ago.

Digital Assets

OKX Chain integrates .crypto domains to simplify wallet transactions

Unstoppable Domains, a company building Blockchain domain names, has entered a partnership with EVM and IBC compatible chain OKC (OKX Chain). This collaboration will grant OKC’s users the ability to simplify deposits and withdrawals within the regulated fiat-focused crypto-asset exchange.

Retail FX, Technology

MetaTrader’s iOS issue opens brokers’ eyes to other trading platforms

In a surprising (or-not-so-surprising) move, Apple has removed MetaTrader 4 and MetaTrader 5 from its App Store in a huge blow for the leading FX trading platform provider.

Retail FX

Pepperstone adds Capitalise.ai analytics and automated trading tools free of charge

“We look forward to bringing significant value to Pepperstone traders and making a real, positive impact in their daily trading habits. We are excited to welcome them on board.”

Retail FX

FP Markets wins Best Global Value Broker for 4th consecutive year at the 2022 Global Forex Awards

“We greatly appreciate the continued international recognition as at FP Markets we pride ourselves on these attributes and these prestigious awards are testament to the hard work from our global team to always provide our clients with the ultimate trading experience.”

Inside View

How to Engage Your Customer at Every Stage of Their Journey

As many as 89% of successful businesses say that providing assistive customer experiences is critical to their growth. That’s because a mere 5% increase in customer retention can boost profits by 25% to 95%.

<