Margin rate changes ahead of the US election

On 8 November 2016, the US electorate will go to the polls to decide the next leader of the world’s largest economy. Due to expected uncertainty in the market, there is potential for heightened market movements, including possibilities of significant price gaps and periods of illiquidity.

Similarly to how Saxo prepared our clients for heightened volatility leading up to and through the UK Referendum (Brexit) event, we will be honouring our commitment to offer margins at responsible levels by changing default margin requirements. Although we are not expecting these modifications to be as dramatic as those for the UK Referendum, we will be evaluating market volatility and acting prudently.

The new requirements relating to the US election will be communicated with as much notice as possible before the election date. As we will be changing the requirements toward all of our White Labels, please prepare accordingly.

If your end-customers follow Saxo standard margin profiles, both you and your customers will be changed automatically.

If you have defined customised margin requirements towards your end-customers, please contact Client Configuration at no later than 28 October to agree the necessary changes. Please note that if you have different margin requirements than your end-customers, this may result in additional finance charges to you.

We expect these changes in margin requirements to be temporary, and anticipate a return to normal levels following the US election on November 8, depending on market conditions.

We suggest that traders place relevant resting orders well in advance of the election, as availability of liquidity on the platform for new trade requests and orders can vary substantially during periods of market illiquidity. We would also like to stress that Stop Loss orders are not guaranteed to be filled at client order level. Stop orders are converted to Market orders once triggered, and dislocations in available liquidity could result in significant slippage on Stop orders.

Therefore, buying options (i.e. puts to protect long positions and calls to protect short positions) could be a hedging vehicle suitable for market uncertainty such as the US Election since the Strike price is fixed in advance.

Please note that we will be informing Saxo’s private clients about these margin changes later this month. Until then, please keep this communication confidential.

US election support materials

The US election support materials are available on our Institutional Marketing Portal, which you can share or use as inspiration for your own marketing materials.

The value of your investments can go down as well as up. Losses can exceed deposits on margin products. Please ensure you understand the risks.


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