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GBP and EUR Margin Changes over EU Referendum

Posted on: 15 June 2016 , by: Pepperstone Support , category: Pepperstone Company News

On the 23rd of June, Britons will go to the polls to vote on whether or not to leave the European Union.

The referendum has been billed as the single biggest currency event of 2016 and has the potential for extreme volatility in GBP and EUR based currency pairs regardless of the outcome.

As a result of this expected volatility, Pepperstone will make temporary changes to our trading terms for margins on GBP and EUR based pairs as well as certain index markets listed below. These leverage changes will apply as of market close on the 18th of June and will be in effect until further notice.

New leverage / margin requirements for affected instruments are as follows:

 GBP pairs and UK100 maximum leverageEUR pairs and EU indices maximum leverage
Leverage
maximum
50:1100:1

We kindly advise our clients to carefully consider and evaluate the potential impact of the above changes as well as the event itself on your existing and future positions on these products. Please also consider the potential trading conditions below in the lead up to the event:

  1. Extreme volatility on GBP, EUR, CHF currency pairs and on UK and European indices.
  2. The propensity for liquidity providers to significantly limit their liquidity, leading to a considerable widening of spreads as well as potential increased amounts of slippage on executed orders.
  3. Ensuring you have enough available margin / equity in your account for the days leading up to and during the voting/announcement of results. This includes "hedged" positions (long and short on the same symbol believing this eliminates your market risk) which if spreads widen have the potential to stop out positions.

Should any further trading terms change on our products, Pepperstone will endeavour to contact you via email, MT4 or by changes made to our website. However, we reserve the right to make further changes without notification such as increased margin requirements, trading restrictions on certain products or any other such matter.

Pepperstone will be carefully tracking market volatility indicators in order to revert to our standard terms as soon as we deem possible. Whilst it is very difficult to predict the nature or scale of the event, depending on the result it could mean these conditions could be in effect for an extended period of time.