Brexit from a vendor’s perspective: Leverate highlights brokers with automated risk management

As Britain’s public prepares to vote in just a day over two weeks’ time in the most poignant referendum in modern times, the outcome determining Britain’s membership of the European Union, FinanceFeeds has spoken to a number of FX brokerages with regard to how they will manage the pre and post referendum period with regard […]

Leverate restructure

As Britain’s public prepares to vote in just a day over two weeks’ time in the most poignant referendum in modern times, the outcome determining Britain’s membership of the European Union, FinanceFeeds has spoken to a number of FX brokerages with regard to how they will manage the pre and post referendum period with regard to potential volatility that may ensue with the EUR and GBP currency pairs.

Over 43 years have passed since Brtain was signed into membership of the EEC (European Economic Community) and thus far, no public referendum has ever taken place.

3/11/15 Picture by Ashley Bingham. Picture taken at the Forex Magnates Summit in London
Nicc Lewis, Leverate

During the 1980s and 1990s, the wish to have a referendum by the British public became increasingly prominent, and on June 23, 2016, the electorate will decide Britain’s united or independent future.

Those who favor a British withdrawal from the European Union – commonly referred to as a Brexit, the acronym being a portmanteau of ‘Britain’ and ‘Exit’ argue that being a member undermines national Parliamentary sovereignty, while some in favor of membership argue that in a world with many levels of supranational organisations any theoretical loss of sovereignty is more than compensated by the benefits of membership of the EU.

Those who want to leave the EU argue that it would reduce pressure on public services, housing and jobs; save billions in EU membership fees; allow the UK to make its own trade deals; and free the UK from EU regulations and bureaucracy that they see as needless and costly.

Those who want to remain argue that leaving the EU would risk the UK’s prosperity; diminish its influence over world affairs; jeopardise national security by reducing access to common European criminal databases; and result in trade barriers between the UK and the EU. In particular, they argue that leaving the EU would lead to job losses, delays in investment coming to the UK and risks to large and small business.

Among those wishing to leave are certain high profile city executives, including CMC Markets founder and CEO Peter Cruddas, who donated £1 million to a campaign which advocates Britain’s exit from the EU.

FinanceFeeds has taken a close look at how retail FX brokerages are intending to navigate any volatility that may arise during the period before and immediately after the referendum, with many taking a wisely cautious line of raising margin requirements, and in some cases ensuring that traders have no open positions during the day of the referendum.

It is potentially a period in which there may be a ‘black swan’ event because the outcome is yet unknown, and the reaction of businesses, governments and lawmakers, as well as central banks in Europe is unknown whether the outcome is that Britain stays in or leaves the EU.

Today, FinanceFeeds spoke to Nicc Lewis, VP Marketing at FX brokerage technology solutions provider Leverate, in order to gauge how Leverate will assist its customers, retail FX brokerages, during the period in the immediate advent and aftermath of the referendum.

Mr. Lewis explained “The Brexit been on our agenda for a while.”

“It is a case of making sure that risk management is at the very top of the agenda” continued Mr. Lewis. “Brokerages have learned time and time again from potential black swan events, therefore the best practice is to implement top quality risk management if a significant event is coming up.”

“We don’t see the referendum or its outcome as a big deal, however we have been training brokers how to react. For those running automated risk manangement systems like ours, it is important to look out for certain instruments, and to know how to put filters in place, as well as being able to look forward and see where should exposure be on certain currency pairs” – Nicc Lewis, VP Marketing, Leverate.

Leverage is a killer during potential black swan events

Mr. Lewis concurs with FinanceFeeds that high leverage is a very risky factor during geopolitical events that may cause market volatility.

“In any event, we believe tht brokers should have learned this long ago and therefore should not be offering such huge leverage ratios” he said.

In conclusion, Mr. Lewis said “No company in this industry should be waiting to see what hapens, but should have already learned, therefore a potential black swan isn’t a big thing. Companies should have a close eye on the business, they already know that the referendum on June 23 is on the calender, and therefore should have all the relevant risk management procedures in place, as well as a 24 hour time frame for human intervention if necessary.”

Read this next

Uncategorized

Investors transfers $424 million out of bitcoin funds in six weeks

Despite bitcoin’s decent surge last week, which took the primary cryptocurrency up 70% from the year’s low, digital asset investment products saw outflows for the 6th consecutive week.

Digital Assets

OKX has $9 billion in ‘clean assets’, shows latest proof of reserves

OKX, formerly known as OKEx, has released its fifth proof-of-reserves report amid increasing demand of crypto investors asking for transparency from exchanges they trade with.

Digital Assets

Circle seeks France license to launch Euro stablecoin

Circle, the issuer of the second-largest stablecoin by market capitalization, is seeking to get a dual registration in France as it aims to on-shore its flagship product for the European market – EUROC – a reserve-backed stablecoin.

Digital Assets

CryptoWallet.com Among Minority of Successful Companies to Renew Coveted Estonian License

CryptoWallet.com has successfully renewed its virtual currency service license from Estonia’s FIU for the third year in a row, despite regulatory changes that have made it harder for virtual asset providers to meet the required standards.

Inside View, Institutional FX

Time for brokers to add options trading as volumes explode on high volatility

“Usually, adding options to the typical CFDs and equities offering leads to fragmentation of the platform technology as many brokers will need additional back-end and front-end components, and that could be an important barrier for them. Apart from that, legal hassle and costs associated with proper licensing of market data could be a barrier at first. We are seeing this trend among market data vendors and exchanges to make it easier and more affordable.”

Metaverse Gaming NFT

GCEX’s DeFi education and prime brokerage offering available in DubaiVerse

“We are excited to be part of the developments of The Sandbox and to join other top players in the region, including our regulator, Dubai’s Virtual Asset Regulatory Authority (VARA), as part of the DubaiVerse. This is a great opportunity to bridge the gap between Web3 early adopters and GCEX clients, building a community around Web3 and digital assets.”

Digital Assets

Circle wants Fed to back USDC stablecoin after “very serious stress test” with collapse of SVB

The collapse of Silicon Valley Bank allegedly proves Circle’s point that there is a need for its USDC stablecoin to be backed by the U.S. Federal Reserve with its U.S. dollars held at the Fed.

Digital Assets

Google searches for Crypto.com and Gate.io exploded by 300% amid FTX collapse

“The findings emphasize the importance of staying on top of market trends and being able to pivot strategies quickly and also offer valuable insights into the current state of the market and the behavior of traders, providing investors with valuable information to make informed decisions about their investments.”

Institutional FX

iS Prime reports £35m turnover, £16.2 million pre-tax profits, £37 cash balances

“We have plans in place to evolve the business over the next year, driving further growth for both iS Prime and for our clients.”

<