Vantage FX warns of spreads widening and slippage ahead of US election
Australian Retail FX broker Vantage FX has issued a notice to its clients, indicating that it expects increased market volatility in the days ahead leading up to the US Presidential election next Tuesday, November 3.
In the notice (see full text below) Vantage FX indicates that it is not making any changes to leverage or margin requirements. We reported yesterday that some brokers, such as Switzerland’s Dukascopy, have already been proactive and temporarily increased margin requirements for some instruments in anticipation of worsening market conditions next week.
However the firm did warn its clients that as uncertainty grips the market, liquidity providers and banks retreat. As a result of this, stops may incur greater slippage and stop out levels may be significantly above or below where clients expect to be executed.
The full text of the Vantage FX notice follows:
Important information regarding US Elections 2020
October 30, 2020
With the U.S Election expected to increase market volatility, keeping our clients and company safe is the number one priority for Vantage FX.
We have conducted a review of our risk management policies ahead of the November 3rd Election and at this point have decided no changes will be made to our current margin requirements.
We would however, like to advise that in the event of extreme market conditions we will take appropriate actions as required to establish a greater level of control during periods of high market volatility and as such this could happen with little or no notice.
During this period there may be times where spreads are considerably wider than usual.
As uncertainty grips the market, Liquidity Providers and Banks retreat. As a result of this, stops may incur greater slippage and stop out levels may be significantly above or below where you expect to be executed.
The market will be extremely volatile as it responds to news releases and updates.
Actions Vantage FX may take to mitigate these risks:
As your broker, we look to protect clients and ensure you have a positive trading experience. Some measures we may take include but are not limited to the following:
As you might expect, we may raise margin requirements for key instruments. This reduces the chance of negative equity for clients and aims to reduce exposure under volatile conditions. This could even come in the form of raising margins on hedged positions to protect from liquidity risks.
Moving instruments to close only:
Under some circumstances liquidity could be so poor and volatility could be so high we may deem it best to move some instruments to close only.
Vantage FX will endeavour to notify you prior to any of these changes being made via both email and the mailbox section of your MT4 platform.
If you have any queries, feel free to contact us on the details below.