Currency brokers tighten trading rules on Greek fears

Online currency trading platforms braced on Sunday for extreme market moves due to events around Greece, imposing higher margins on much trading of the euro and in some cases preventing traders taking up new speculative positions.

Retail platforms FXPro, Mayzus, Alpari and US-based FXCM were among those tweaking the terms of trade in a market that in theory trades all day every day but should only see volumes rise when Asian investors and traders return to their desks on Sunday evening.

“Depending on the severity of market conditions come Sunday night/Monday morning, we reserve the right to limit EUR trading to the closing of existing positions only,” FXPro said in a statement on its website on Saturday evening.

The nerves around Greece follow a wide-ranging reassessment of risks this year by the other major players in a market which allows ordinary individuals to make highly-leveraged bets on moves in dozens of currencies just by registering on websites.

A number of major players including FXCM, IG Index and Saxo Bank, lost millions in the 10 minute surge in the Swiss franc on Jan. 15, the biggest moves in a major currency in the era of free-floating exchange rates dating back to the early 1970s.

Individual investors hit by the franc event are fighting with some platforms over losses also running into tens of millions.

Spokesmen for IG and Saxo had no immediate comment on preparations for Monday’s trading.

Industry website financemagnates.com listed rises in FXCM’s margin requirements – the percentage a trader must put down to hold a leveraged position – on euro rates against major currencies as well as on some sterling currency rates. A spokesman for the company had no immediate comment on Sunday.

Financemagnates also said another player, Alpari, last week warned clients they may have to face some changes in trading conditions on their euro-yen and euro-dollar trades in relation to prospective market turbulence.

The leveraged and highly-liquid nature of currency trading makes it more exposed to big percentage moves, which on equities markets for example are more common and carry relatively less risk for particular investors.

A trader at a top 10 EMEA equities broker, however, said that staff were already making preparations and holding calls with clients on Sunday in anticipation of a volatile open on Monday.

[Reuters]