How FX brokers will adjust trading conditions during the Brexit referendum: Blackwell Global
Blackwell Global UK’s Patrick Latchford looks at how the brokerage is preparing to navigate tomorrow’s EU referendum
Tomorrow, the population of the United Kingdom casts its vote in an unprecedented referendum, the results of which will decide the future of the nation’s membership of the European Union.
The referendum is scheduled to take place in the United Kingdom and Gibraltar on 23 June 2016, and is a very important milestone in British and European history, whichever way the voting goes.
Currently, the opinion polls that are being closely monitored by the electorate as well as commercial enterprises and government officials alike, show that those currently in favor of Britain’s exit from the European Union, and those who would prefer the country to retain its membership, are almost equal in numbers, making the outcome very difficult to gauge, even at this close stage.
Membership of the European Union has been a topic of debate in the United Kingdom since before the country joined the European Economic Community, known in those days as the EEC, or the “Common Market, in 1973.
During the past week, FinanceFeeds has spoken to several FX firms with regard to how they intend to make provisions for potential market volatility that could ensue during the time of the referendum, the latest being Blackwell Global, which has today provided its measures, which include increasing margin rates.
“Increased margin acts to protect the trader” says Mr. Patrick Latchford, CEO of Blackwell Global UK. “During erratic trading conditions, markets can show signs of gapping, which may inadvertently cause problems to trading activity in the form of stop-outs. This can prove to be a problem to traders who hold big positions. Our main priority is, and has always been the interests of the trader.”
Another measure that will be taken is the temporary halt of new trades on the polling day – starting 7am UK time (6am GMT) until 27th June, Monday, 5pm UK time (4pm GMT), subject to market volatility. This is an imperative that stems from the prediction of volatile trading conditions.
Mr. Latchford explains that the risks posed by this extremely rare event necessitates this policy, and that it is appropriate to give the market time to stabilise before trading resumes.
To further elaborate on this point, Mr. Jansen Khoo, Head of Risk and Prime Services, agrees that such measures act to protect at the core, the trader.
Mr. Khoo explained “The trading halt is to help clients avoid incurring huge slippages during the UK referendum, since most liquidity providers tend to widen spreads due to thin liquidity. Our risk analysts are fully engaged during this period of uncertainty, to further assure our clients of the safety of their investments. “Blackwell Global has a strong track record of handling complex events such as the Swiss National Bank (SNB) crisis, and aims to maintain its reputation of being a reliable and responsible brokerage. “
