Forex.com, one of the retail forex brokerages of Gain Capital, announced it is temporarily increasing the margin requirements on the EUR forex pairs in order to protect its clients from potential market volatility around the upcoming general elections in Germany. Even though the outcome of the elections appears predetermined with a stable lead of the ruling coalition of Angela Merkel, a surprise is never impossible and it could affect the markets and the Euro rate significantly. Do you think other brokers will follow suit and raise the EUR pair margins before the elections?
I think it's an appropriate move overall. It would suck if brokers placed too much trust in their "liquidity" provided that they actually send a net order out to the market. If anyone were to take an appropriate euro trade, it'll protect themselves a bit more in terms of hitting preventing a negative balance if MC-ed. Sometimes, you just gotta ignore the complaints of those retail guys whining about brokers raising up margins and "preventing them from trading", blah blah bs.
The XM broker also announced it is taking precautions against extreme market volatility, thin market liquidity and abnormal spreads and price gaps around the upcoming general elections in Germany (on September 23) and New Zealand (on September 24). In order to better protect its clients, the broker will temporarily increase the margins on all positions (opening and maintaining the existing positions) on instruments containing EUR, NZD, gold and silver.
FxPro also announced it is temporarily increasing its margin requirements ahead of the German general elections on September 24. They also say that in cases of extreme volatility and lack of liquidity, the broker may also refuse the opening of new positions, enabling ‘Close Only’ functionality.
The German elections were expected to cause a lot of volatility on the market so various brokers introduced measured that made it difficult to trade the pairs that were supposed to be affected by the results of the elections. That way their clients would trade them less and the possibility to lose money was smaller.