Global Retail FX and CFDs broker Admiral Markets has sent out a note to clients (see full text below), indicating that the company is lowering the amount of leverage that designated Professional clients can use in trading Silver CFDs.

Clients trading up to position values of €500,000 can access leverage of up to 100x. For larger positions, leverage is limited to just 10x.

Retail clients were already limited to a maximum leverage of 10x in the UK and all EU countries, so they aren’t affected by the new rules.

COMEX Silver futures are trading up about 10% Monday, as are some Silver ETFs in pre-market US trading, as retail traders who ganged up in Reddit chatrooms to attack over-shorted stocks last week have now turned their attention to commodities – starting with Silver. Brokers seem to be expecting increased volatility in Silver related instruments over the coming days.

The full note sent to clients by Admiral Markets reads as follows:

Dear Traders,

Due to increased volatility, we are reducing the maximum possible leverage rate available for Professional clients on our Silver vs U.S. Dollar CFDs to 1:100 today on 1st of February 2021 after 17.00 EET (our MetaTrader time zone).

Retail clients who trade with leverage rates of 1:10 or lower are not subject to these changes.

Regardless of your client category, trading during extreme volatility involves significantly increased risk. Please read below.

Changes for Professional Clients

The reduction of leverage for Professional clients affects the following instruments available on our trading platform:

SILVER,
XAGUSD-Z,
XAGUSD-ECN.

For notional position values up to 500,000 EUR (or USD or equivalent in another currency), the maximum possible leverage will be 1:100.

For notional position values in excess of the above mentioned 500,000 EUR, the leverage will be 1:10.

The new reduced leverages of 1:100 and 1:10 will apply to all new positions in the above-mentioned instruments. Previously established positions in these instruments remain unaffected only until your next trading action in these instruments. When we execute a trading order of any type (including stop-loss orders, take profit orders, automated trade executions by a Robot/EA and partial closes) in any of the above-mentioned silver CFDs, we will instantly apply reduced leverage to all your open positions in this instrument.

We encourage all clients who actively trade silver CFDs and wish to keep existing positions open to check whether their accounts are sufficiently funded to weather increased volatility and to prevent the liquidation of open positions (stop out) due to recalculation of margin requirements on the next trading action. Should additional funds be required to support your trading decisions, we provide several near-instantaneous payment options in Trade’s Room.

How to manage risk during extreme market volatility

We recommend that both Retail and Professional clients review their exposure in all affected instruments and adjust it to acceptable risk levels if required.

Please be aware of other increased risks within the period of high volatility, among all other risk factors:

• Sharp moves and significant gaps in market prices,
• Limited liquidity, which may result in significantly wider spreads, and an increased amount of order rejections and slippage,
• Significantly higher overnight fees (‘Swaps’),
• Affected instruments going into close-only trading mode and implementation of absolute position value limits.

With this in mind, it is a good idea to check all open positions and ensure they have appropriate stop losses in place. You can edit the stop loss level at any time for FREE in our trading tools.

Make sure to frequently check the details of the affected instruments in the Contracts Specification section on our website because, in stressed market conditions, applicable Swap debits and credits as well as supported trade sizes and trading session times may be subject to changes without special notice to you.

Finally, remember that stop-loss orders are a tool intended to automate your position exit routine – they are not a guarantee of a certain position exit price, and clients should still be aware of the high risk of gaps in market prices during volatile periods.

We reserve the right to make further changes to our margin rates or implement any other changes to our silver CFDs to ensure they accurately reflect current levels of market volatility and liquidity.

Kind regards,

Admiral Markets