Saxo Bank announces margin rate changes ahead of the French election

Today, Saxo Bank has announced temporary margin rate changes on equities, interest rate and FX related instruments ahead of the French election. Please find more details in the attached note sent to clients.

Claus Nielsen, Head of Markets Saxo Bank comments: “Following the first round of voting in the French presidential election, we have seen the euro and European stock indices rally whilst odds of a Le Pen victory have dropped significantly.”

“However, this does not mean that risk is off for the second round of the election. It is important for us to emphasize this risk and ensure that our clients trade the election with proper leverage and risk management in place. In fact, this week’s rally means that an unexpected election result, which would be the third time in a major political vote in the past 12 months, would likely result in a significant drop in EURUSD and also affect stock markets” – Claus Nielsen, Head of Markets Saxo Bank

We are following the same procedure as around the UK EU referendum and the US election where we raised margins and worked with our clients to ensure they we did not go into the events with too high risk. In both cases our clients were overall able to trade these events successfully and in aggregate emerged profitable despite the surprise outcome of both events and the high volatility. A Le Pen victory is not our base scenario but nonetheless, it is important for us to protect clients by ensuring proper leverage and risk management for example with options as a hedging vehicle.”