Saxo raises margin requirements on pound trades
Saxo Bank increased its margin requirements for clients wanting to execute trades in pounds, ahead of the 23 June referendum on the UK´s membership of the European Union.
The referendum "is a significant market event whose outcome may lead to disorderly markets impacting pricing and liquidity of certain assets," Claus Nielsen, head of Saxo’s markets unit, told Bloomberg.
The broker thus announced on Monday that margin requirements on trading the pound would be hiked from 2% to 7%, following its analysis over the past two months of implied volatilities in the market for FX options.
Effective on 16 June, the adjustments would also impact on trades in euros, francs, yen and of gold. It would also apply to UK Index CFDs, European Index CFDs, UK single stock CFDs as well as UK stock options and UK cash stocks.
“Going into an event of this magnitude with less than a 5-7 percent margin requirement on any U.K. margin instrument does not seem responsible to us and gives the retail client the wrong impression of the underlying volatility and risk,” Nielsen said.