Brokers Adjust Leverages to Cope with COVID-19 Volatility

Three major trading brokers Admiral Markets, Dukascopy, and IG changed leverage for margin trading on the same day. These measures were made to make up for uncertainties caused by the coronavirus pandemic.

Admiral Markets reduced the maximum possible leverage available to professional clients on four crude oil CFD instruments. For notional position values up to 500,000 EUR or its equivalents, the maximum leverage will be 1:50. Values in excess of the above will be 1:10.

These new margin requirements will begin on April 4 and remain until further notice. These will apply to all open and upcoming positions in EUR, USD, or other equivalents. 

According to the brokers, WTI crude oil hit a 17-year low at $19.02 a barrel. Russia and Saudi Arabia are debating cutting the global oil supply by 10 million barrels a day to prevent price falls.

Dukascopy’s leverage for commodities, indexes, and precious metals was reduced to 1:30. Other remaining trading instruments will remain the same. 

IG, on the other hand, reduced leverages on FX/gold, indices, and oil. Namely, indices’ minimum margin was raised to 5% while the other two were now 15%. Margin rates will have a minimum of 1% indices/FX and 5% Oil. 

Meanwhile, Some Brokers Overpowered

Not all financial brokers are seeing lowered revenues amid the coronavirus. GMO and CMC Markets both expect high, and possibly record-breaking revenues for 2020.

GMO recorded the best volumes since at least mid-2014. The Japanese retail broker saw $8.5 billion in forex trading and a total trading volume of almost $1.84 trillion. Overall, last month’s volumes posted a strong 202.9% uptick in yearly comparison.

Meanwhile, CMC Markets saw its CFD business generate a gross client income of around £241 million. This represented an increase of 11.6% year-over-year against the £216 million achieved in fiscal 2019.

Both brokers’ income came from increased market activity led by the coronavirus.

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