Clients of Australian FX company AxiTrader can wave goodbye to leverage when trading the euro against the Swiss franc (EURCHF).
AxiTrader today announced that as a result of the firm responding to changing market conditions, the company’s Risk Department will be amending the standard margin requirements for EURCHF positions to 50:1 from the previous level of 100:1.
The new requirement will be effective from 01 December, 2014 and will remain in place until further notice.
As far as the effect this will have on the trading of these instruments is concerned, AxiTrader has confirmed that if a customer is trading EURCHF positions, the additional margin may require traders to increase their collateral with AxiTrader, or to reduce their EURCHF position.
The company iterates that failure to meet the new, higher margin obligation will put traders in to margin call and may result in the automatic close out of certain positions.
Whilst this represents a significant reduction in leverage over the previous level, it is in keeping with many companies globally and indeed is likely to not only be a prudent move for AxiTrader, but also one which should appease regulatory authorities globally, especially in the Far East, a market in which Australian firms have shown a vast degree of interest lately.
As an example, the Japanese Financial Services Agency introduced a ruling two years ago that leverage on all instruments across all retail trading platforms should be no more than 1:25. This did not deter traders, on the contrary, 2013 heralded trading volumes of over a trillion dollars per month, for several summer months in succession as Japanese traders continued to dominate the global FX markets.
AxiTrader’s range of services have evolved recently, with the company making a foray into the Prime Brokerage segment, as well as majoring on social trading technology.
With regard to gaining an additional perspective on the decrement of leverage, the EUR/CHF chart below makes a clear depiction.
It is clear that the previous time the EUR/CHF got close to the floor at 1.2000, that move was followed by a steep rise in the price, however currently the price is hovering around floor levels again.
This presents profit opportunities for traders who open a long position, and AxiTrader emulates a move which certain other companies such as Dukascopy made in October, the first time the price of EUR/CHF got near the 1.2000 mark.
At that time, the Swiss company revised the maximum leverage level from 1:20 to 1:10.
For the official announcement from AxiTrader, click here.