The Japanese operations of Saxo Bank, a multi-asset broker, announced this Friday that it would be revising its margin ratio for individual stock contracts for differences (CFDs) amid increased volatility.
In particular, Saxo Bank Japan will be raising the margin rate for some stocks in single stock CFDs. The changes will take place on Saturday, the 14th of March 2020, at midnight. Customers of the broker will be able to see which stocks have been affected by checking the “Margin rate to be changed” in the trading tool, the statement said.
As the financial markets have been experiencing increased volatility this week amid fears of coronavirus, with more cases being confirmed across the globe, stocks, currencies, cryptocurrencies, and commodities have all seen dramatic swings over the past week, and with the situation not likely to get better any time soon, brokers may feel the strain.
Flash crash events, such as the one seen this week on Monday, can cause financial harm to forex brokers. Historically, these types of situations have led to clients receiving margin calls and having positions closed out at a negative balance. Furthermore, large changes in major currencies can cause hundreds of millions in losses.
Saxo Bank: stock market has seen unprecedented volatility
“The stock market has seen unprecedented volatility as a result of the simultaneous global stock depreciation triggered by the spread of the new coronavirus. In light of these circumstances, we have reviewed our margin requirements for some individual stock CFDs. Please check the following for details,” Saxo Bank Japan said in its statement today (translated).
“Please note that margin changes and loss cuts may occur at the time of applying the new margin rate depending on the customer’s funding status and the status of the current position due to the change in margin, so be sure to check your account status.”
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