On anniversary of Swiss black swan, Dukascopy will take action against potential negative equity, this time on USDCNH

On January 15, 2016, one whole year will have passed since the Swiss National Bank removed its 1.20 peg on the EURCHF pair, sending markets into unprecedented volatility, causing some brokerages to be exposed to negative client balances, and other brokers to cease to exist altogether, so grave was the exposure. Switzerland’s own Dukascopy Bank […]

Swiss black swan

On January 15, 2016, one whole year will have passed since the Swiss National Bank removed its 1.20 peg on the EURCHF pair, sending markets into unprecedented volatility, causing some brokerages to be exposed to negative client balances, and other brokers to cease to exist altogether, so grave was the exposure.

Switzerland’s own Dukascopy Bank has today issued a notice that on the anniversary of the Swiss National Bank event of last year, January 15, 2016, it will also be taking a look at volatility and potential exposure to negative client balances, albeit this time between the USD/CNH (Chinese offshore Hong Kong based renminbi).

Dukascopy Bank has today issued a notice stating that due to the current high volatility and low liquidity on USD/CNH, the company considers that there is an increasing risk of significant price gaps, which may cause negative equity on client accounts. Because of that Dukascopy Bank and Dukascopy Europe are forced reduce maximum leverage for exposures on USD/CNH to 1:10 as of 15 January 2016 at 11:00 GMT.

The company advises that traders are invited to estimate their margin usage at the moment that the leverage reduction on USD/CNH will be applied and adjust their exposure if needed, and recommends to note that for all accounts where there is no such USD/CNH exposure the lower maximum leverage will be applied today, 12 January 2016.

Additionally, Dukascopy Bank asks traders to further note that Swaps in USD/CNH have seen a dramatic price shift from less than 10 pips last week to above 100 pips as of today.

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