Leading forex broker FXCM joined the growing group of brokers temporarily raising margin requirements ahead of upcoming US presidential elections. On Wednesday FXCM announced that margins for EUR/USD, USD/JPY, GBP/USD and USD/CAD, plus nine other crosses will be increased from 1% to 2% in anticipation of high market volatility.
Furthermore, the margin requirement on USD/MXN will increase from 4.6% to 10%, the USD/SEK requirement will double from 3% to 6%, while that of USD/NOK will rise from 1.5% to 3%.
The new leverage levels will come into effect on Friday, November 4, after 5 PM EDT (2100 GMT), and will last until market conditions are back to normal.
The political environment in the US, and presidential Elections in particular, influence forex and stock markets a great deal. A win by Clinton is likely to be interpreted as a signal for business-friendly legislation and tax easing measures.
The prospect of a win by Trump, on the other hand, is seen as an unfavorable outcome for banking sector in light of his anti-Wall Street rhetoric throughout the campaign.
Higher-than-usual levels of volatility are seen within the weeks prior to the Election Day, which will take place on November 8. As the day approaches, the list of brokers who are taking precautionary measures is expanding. Among them are IG Group, Octa FX, Capital Index, Saxo Bank, Alpari, Vantage FX, Dukascopy, Hantec Markets, and Blackwell Global.
FXCM (NASDAQ:FXCM) is one of the few brokers who still operate in the US. It is a registered Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) with the US Commodity Futures Trading Commission (CFTC). It has units registered and regulated with the relevant authorities in the US, the UK, Australia, and France. The broker offers forex, CFDs, and spread betting services.