As the clock is ticking, the date for the Brexit vote is coming closer and the brokers have to yet prepare for the issues related to the Brexit. This Thursday a multi-regulated Forex and CFDs brokerage firm, Admiral Markets has announced that they will make some changes to its trading terms. The changes will be for the professional clients and will be temporary as they are brought because of the upcoming Brexit Vote.
The parliament of the United Kingdom will be voting for the Brexit Agreement on January 15, 2019. Before that, the initial date for the voting was 11 December of the previous year. Many of the brokers, like Admiral Markets now, have announced leverage restrictions back then. Brokers like Saxo Bank, FxPro and Ducascopy have changed the leverage caps but as the voting process did not take the place and was postponed till January now the brokers have to do it again.
The new leverage cap
According to the Admiral markets, the maximum leverage that is available for professional clients on selected contracts for difference (CFD) instruments will be reduced. The changes will be active from 9:00 am (EET) on January 15, 2019, till the midday of January 16, 2019.
Although, the changes will not apply to the leverage caps for Russian ruble and Czech Koruna as it will stay the same. All the other currency pairs will have a new temporary leverage cap. For FX and selected commodities such as gold, silver, Brent, WTI, as well as XASUGD-ECN, XAUUSD-ECN, and XAUAUD-ECN the new leverage will be 1:200.
As for the indices and select futures-based instruments, the leverage will be limited to 1:100.
As the Admiral Markets highlight, the changes will not apply to the retail clients who are trading with leverage rates of 1:30 or lower. Such clients will be covered with unconditional negative account balance protection. However, the broker has emphasized that negative balance protection will not be applied for professional traders when the market is in abnormal conditions.
Warning from Admiral Markets
Besides changing the leverage caps the broker also advises traders to be careful with the aftermath of the vote. As per as their statement clients should be aware that the volatility of the British pound based CFDs and currency pairs that are containing the GBP will be increased. Also, it is expected since there will be wider spreads markers might also be impacted by limited liquidity.
Back in 2016 where the big voting about Brexit took place, many brokers found themselves struggling as they could not meet their customers’ demands due to the squeeze on liquidity. For this not to be repeated now in 2019 we should expect that many brokers will follow the lead of Admiral Markets. As there are only several days left before the voting, it is expected that we will hear the news about reducing leverage caps from many other brokers as well, which will logically try to reduce the fallout from a Brexit vote.