The most recent broker who decided to take precautionary steps in advance is XM.COM. They have successfully managed to hike up the margin requirements of the European Union. This upcoming weekend, Europe’s highly anticipated next big vote will take place. Meanwhile, Italy is completely poised in voting for a referendum which will most likely have a massive impact on the global foreign exchange markets. Italy’s vote will have significant effects especially on the European Union. The Italian referendum is scheduled to be held this coming Sunday, December 4, 2016. Even though it has yet to occur, some currency trading brokers have already made the decision to alter their trading conditions before the actual event takes place. The most recent broker who has decided to change their margin requirements is XM.COM. The main reason for altering their requirements is due to the anticipated possibility of volatility.
Similar to XM.COM’s decision, other brokers also felt the same way regarding the potential volatile situation they will be facing. In the past few weeks, more and more brokers are making changes in their margin requirements. This has influenced the increase of leverage thresholds as well as similar adjustments. Several brokers are anticipating the potential volatility connected with Italy’s decision on December 4. Looking back on the foreign exchange market in 2016, there have definitely been no lack of volatile events which took place this year. The best examples of this are the United States elections and the Brexit referendum. Both of these important events have had very unexpected results.
Tension Builds Up in the European Union
This upcoming weekend, Italy is scheduled to have their highly anticipated referendum. There is no guarantee that they will not be triggering or influencing any significant foreign exchange market moves. Additionally, most foreign exchange experts are confident that Italy will make the right decision. Although this is what is expected from the Italian referendum, if the country decides not to vote, it could result in major consequences for the European Union. By choosing not to vote, their decision would result in a catalyst which would make the country very vulnerable. It would lead them out of their long time partnership with the European Union. The possible outcome of this decision by Italy would have enormous repercussions for the European Union.
Because of this, XM.COM has decided to implement a number of changes to their margin requirements. This will take effect on December 2, 10PM, GMT+2 server time. These margin changes will greatly affect both existing and new positions. It is scheduled to be restored back to its default levels on December 5. Together with these changes, there will also be some relevant alterations which needs to be implemented. This includes the European Union denominated currency pairs, specifically Silver and Gold to be changed into 1% which is equal to 100:1 leverage. As for all of the CFDs which are related to Equity Indices and Commodities, they are scheduled to be changed into 3% which is equal to 33:1 leverage.