Coping with Brexit – How Did Forex Brokers Fare?

Yael Warman

Last Thursday’s UK referendum on EU membership led to the most significant political and economic event in the UK – and by implication Europe and the wider world – for decades. In an entirely unexpected result, UK voters opted to leave the EU by a margin of 52% to 48%. With polls closing on Thursday […]

London, Canary Wharf from Thames

Last Thursday’s UK referendum on EU membership led to the most significant political and economic event in the UK – and by implication Europe and the wider world – for decades. In an entirely unexpected result, UK voters opted to leave the EU by a margin of 52% to 48%.

With polls closing on Thursday evening at 10:00pm, Betfair’s initial reaction at that time was to predict an 87% chance of a victory for the Remain camp, a percentage similar to that of other bookmakers, and one that seemed more and more outrageous as the results were announced throughout the evening.

Friday’s trading saw the pound reach 30-year lows against the dollar, at one point trading below 1.34, before recovering slightly later in the day to finish above 1.36. This morning’s early trading has seen the sterling drop again to around 1.34, with analysts predicting that the sterling has further losses to endure over the next few weeks.

Warning investors not to assume that the bounce in the sterling was long term, Ric Deverell, Research Analyst at Credit Suisse, explains: “While we acknowledge the risk of a technical bounce back, we think the repricing in many markets has further to run. The dollar rally is forecast to continue, with the GBP to USD conversion moving into the 1.20s.”

With a Remain result being increasingly factored in to the value of the sterling in the lead up to the referendum, and the exchange rate almost reaching 1.50 at poll closing time on Thursday, forex traders were left dealing with a massive fall in the value of the sterling. As we reported last week, forex traders were taking the decision across the board to limit leverage, with many reducing leverages in sterling-based transfers in the lead up to the vote itself.

CFI Markets announced that they would be extending limited margin requirements at least until today, saying: “We would like to hereby inform you that CFI Markets will keep margins as is currently at least until Monday… Additionally, and although we will try to keep spreads as low as possible, these risk to be higher (sic) than in ordinary times.”

Other companies chose to limit margins even further, predicting that markets were likely to be hit by sustained uncertainty throughout this week. One such company was Hantec Markets, who issued a statement saying: “Hantec had earlier limited margin to 25:1 (pre vote), and will now limit leverage further to 10:1 on all spot FX, spot CFD, spot Oil an spot Bullion positions.”

On the whole, companies had prepared satisfactorily for the result, even if it was unexpected. IG’s statement was as follows: “The Company managed its operations and exposure very effectively through the night and into today (Friday).”

There were however several companies whose trading sites crashed during the night, leaving traders and customers very unhappy., one of the UK’s most popular currency trading apps, crashed early Friday morning, with the company saying that “It had been pounded by record-breaking levels of traffic prompted by the unprecedented event.”


Read this next

Industry News

SEC charges ex-Morgan Stanley advisor for defrauding NBA players $13 million

Darryl Matthew Cohen was arrested this week and is facing three different federal counts of fraud, which could amount to 20 years in prison if convicted, besides the SEC complaint. 

Industry News

AWS FinTech Africa Accelerator launched, applications until April 27, 2023

Founders will be offered tech resources, expert guidance, and a global network of industry leaders, technologists, entrepreneurs, investors, associations, and partners, in order to build their fintech products. 

Industry News

Interactive Brokers pays unmatched interest up to USD 4.33% on cash balances over $10,000

For clients of Interactive Brokers, interest accrues daily, and payments are posted on a monthly basis. Interactive Brokers’ cash management is integrated into client broker accounts, making it simple to earn interest and borrow at the lowest rates without transferring cash.

Retail FX

FP Markets adds cTrader to roster of trading platforms that include MT4, MT5, Iress

“Our market share swings towards the more sophisticated segment of traders and we have been inundated with requests for an additional platform with more institutional-style characteristics. The addition of the cTrader trading platform offering allows our clients the choice to further shape their trading experience with us.”

Digital Assets

SEC mulls lawsuit against Coinbase’s staking and spot trading

Shares in Coinbase fell 15 percent after the US Securities and Exchange Commission threatened a potential enforcement action against the crypto exchange over certain products.

Digital Assets

Kraken halts ACH transactions amid banking crisis

San Francisco-based cryptocurrency exchange Kraken says it will no longer process Automated Clearing House (ACH) following the failure of its payments partner, Silvergate Bank.

Digital Assets

French influencers face two years in jail for promoting crypto products

France’s National Assembly’s Economics Committee voted in favor of a law that bans social media influencers from touting risky financial services, including cryptocurrencies.


Exberry’s Guy Melamed on paradigm shift with cloud-native exchanges at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Guy Melamed about Exberry’s cloud-native exchange SaaS platform certified by AWS to bring about a paradigm shift in the industry at a time of cybersecurity concerns.

Retail FX

Playtech revenue grows to €1.60 billion in 2022

Playtech plc (LSE: PTEC) reported solid financial results for the fiscal year 2022 as B2B growth and Snaitech’s record performance pushed it towards large gains in revenue and net profit.