Brokers lower the sip before voting on Brexit

Tomorrow, 15 January 2019 in the British Parliament there will be a vote regarding the agreement on Brexit. As a result, brokers began to inform about the reduction of financial leverage on selected instruments.

It mainly applies to professionals

Due to the uncertainty regarding the result of the vote, specialists expect increased volatility on the financial markets, in particular currency pairs with the British pound, European stock indices, and commodities.

Depending on the internal decisions of the brokers, the conditions for the time of market uncertainty may vary between individual companies. 

Brokers announce an increase in deposit requirements from Tuesday morning to noon hours on Wednesday. The changes will mainly affect stock indices as well as selected currency pairs. In most cases, brokers report lever reduction to the 1 level: 50. This means that, in practice, temporary changes will only include clients with professional status, or those who use broker services outside of the EU (not covered by ESMA guidelines).

With consistency for open positions

It is worth noting that the reduction in leverage applies not only to new positions, but also to those opened before the introduction of changes. Each client should make sure that the reduction of leverage will allow him to maintain an adequate level of security on the account so that it does not result in the Stop-Out mechanism.

Selected brokers offering protection against negative balances for professional clients also point out that pre-debit protection may not apply to the so-called unusual conditions, that is, when the market reaction is far from normal.

Be aware of the risk

In addition to preventive actions on the part of brokers, it should be remembered that all types of surprising information may result in price gaps, slippage during order execution (also Stop Loss and Take Profit), widening spreads and even temporary problems with the time of executing commands on the platform.