Why did brokers only increase margins on GBP pairs? Indices and gold volatility very high

During the advent of yesterday’s referendum on Britain’s membership of the European Union, many firms took prudent measures by increasing margins on pairs which include the British Pound in order to make provision for any ensuing volatility once the outcome of the referendum became known. In a remarkable outcome, Britain’s electorate voted for the country […]

GBP Pairs brexit

During the advent of yesterday’s referendum on Britain’s membership of the European Union, many firms took prudent measures by increasing margins on pairs which include the British Pound in order to make provision for any ensuing volatility once the outcome of the referendum became known.

ar
Andrew Ralich

In a remarkable outcome, Britain’s electorate voted for the country to exit the European Union with 52% of the 72% of the adult population which casted votes having elected for the country to become an independent sovereign nation, after a sustained period of uncertainty as the polls showed a consistent equilibrium between those in the ‘leave’ camp and those in the ‘remain’ camp.

Now, as Britain goes it alone and frees itself from the burden of bureaucracy of the European Union, a period of volatility ensues and the markets have reacted to this unexpected outcome.

An interesting perspective that has come to light is that whilst most firms concentrated on currency pairs involving the Pound, stocks and indices as well as pairs involving non-European currencies remained tradable under existing terms, with no margin changes.

Today, Andrew Ralich, CEO of institutional FX software development company oneZero spoke to FinanceFeeds on this matter “In terms of technology preparation, from our perspective, we feel that Brexit was a success across the board.”

“At oneZero we saw some unprecedented load on our systems, but throughout the slide we had no reports of execution or connectivity challenges. What will be interesting to learn about in the days to come is how brokers fared with this unexpected move, specifically those who chose to adjust margins on GBP and EUR crosses only. It’s safe to say that many brokers who announced their margin changes leading up to the event did not anticipate the massive moves we saw across the board, specifically in JPY, Indicies and Gold” concluded Mr. Ralich.

 

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