IG to change margin requirements for CFDs on certain stocks
Online trading major IG has provided an update on margin requirements.
The company explains that, due to the recent extreme volatility, and in order to prioritise the service IG provides to its existing clients, IG is not allowing any new positions to be opened on the US stocks GameStop and AMC Entertainment.
These restrictions apply to all IG accounts, and will be reviewed regularly. IG clients will still be able to close any open positions that they have in these stocks. Any orders that traders have already placed on these two stocks will remain.
In addition, traders who have any spread betting or CFD positions on either stock should be aware that the margin required to keep their positions open will increase from 4pm (UK time) on Monday 1 February. The changes will apply to a total of 31 stocks.
Traders who have any open positions on these stocks at 4pm (UK time) on Monday 1 February 2021, will see the margin required to keep those positions open change. Traders will need to have enough money in their account to cover the increase and prevent their positions from being closed out.
Margin requirements for working orders will also be subject to the new rate. Changes to margin rates are the same for daily funded bets and forward bets, and for cash CFDs.
Last week, IG noted that it was seeing increased volatility in certain stocks, including GameStop and AMC. This increases the risk of sudden, large or rapid loss and the potential for gaps, where stocks fall dramatically when the market opens.
In its statement on the latest market developments, the UK Financial Conduct Authority (FCA) said that:
“Broking firms are not obliged to offer trading facilities to clients. They may withdraw their services, in line with customer terms and conditions if, for instance, they consider it necessary or prudent to do so. Firms are exposed to greater risk and therefore more likely to need to take such action during periods of abnormally high transaction volumes and price volatility”.