ThinkMarkets Set to Increase Margin Requirements on CFDs

ThinkMarkets, the premium multi-asset online brokerage, announced its anticipated move to increase margin requirements on some CFD equity products. Low levels of liquidity in the global equity markets and unprecedented volatility have been the main motivating factors here.

In the financial markets space, volatility acts as a measure of financial risks and financial uncertainty. Volatility is crucial to assess uncertainty surrounding investments in financial assets. In addition, financial industry regulators, mutual fund managers, policymakers, and individual investors largely depend on it.

An increase of margin requirements will cut across MT4, MT5, and ThinkTrader platforms. If the margin requirement is increased, investors will need to bring in additional funds towards the open position, failing which the position will be off the table.

Moreover, due to significant margin changes for these products, the company requests traders to ensure their accounts are capitalized. This appeal is meant to avoid a margin call if one holds a position in any of the highlighted areas.

The change will affect all traders in their respective regions including London and Melbourne and hubs in the Asia-Pacific, Middle East and North Africa, Europe, and South America.

In its official statement, the broker said, ‘’Due to unprecedented volatility and low levels of liquidity in the global equity markets, ThinkMarkets is increasing the margin requirements on a selection of CFD equity products across our MT4, MT5, and ThinkTrader platforms.’’

The expected changes will take effect from Feb 9th, 2022 at 2100hrs GMT.

ThinkMarkets has proven to be one of the flourishing brokerages globally. Lately, the broker entered the institutional space with the launch of the United Kingdom-regulated multi-asset liquidity platform. In addition, ThinkMarkets extended their deal by sponsoring Liverpool, one of the best England teams.

The Leading Measure of Liquidity

Mention Liquidity and Investor confidence go hand-in-hand. Liquidity exists where risks are quantified and when investors are confident in their ability to trade. This narrative translates to the creditworthiness of investors. Moreover, the assessment of liquidity conditions can be conducted through the risk premiums on financial assets and the momentum of capital flows.

In a simple proposition, liquidity is confidence. High liquidity is associated with low-risk premiums. The risk measure is greater when the perceived quantity and variance of risks are low.