Amid broad anticipations over Brexit voting, it is expected that the market volatility will rise. Thus, the Singapore Exchange Ltd started raising the amount of cash companies must pledge to cover their trading positions.
The first to open during the wake of a landmark referendum are Asian markets, that will witness UK citizens decide on whether they prefer the country to remain as a member of the European Union or not.
Investors are expecting a solid volatility, mainly in currency markets and related currency derivatives contracts, especially if the “Leave” camp will win.
Chief Risk Officer at SGX Agnes Koh said, "SGX has been assessing the potential impact of the UK's referendum on the country's EU membership,"
"Given the potential for increased market volatility, we have taken the precautionary step to introduce higher margins for contracts, include those with material open interest.”
Market volatility has started to kick off in the run up to the referendum, suggesting a 14 percent increase in the CBOE Volatility index as the recent polls showed the result was too close to call.
The Australian and Japan markets are anticipated the bear the brunt of the beginning trading session of the Asia-Pacific.
Australian Securities Exchange
A notice was recently issued to market participants, which entails further signals from the Australian Securities Exchange for a potential added margin call on cash and futures products during the course of Friday’s session.
“Participants should be prepared to meet all intra-day margin calls,” the notice added.
A spokeswoman for the Japan Exchange Group, which manage the Tokyo Stock Exchange, including the Osaka Securities Exchange mentioned that the bourse left margins unchanged, but was taking measures to safeguard smooth trading in expectation of heightened trading volumes as well as the increasing number of monitoring workers.
A spokeswoman for LCH, which clears over-the-counter derivatives in Australia, refrained from giving comments with clients, however, she stated that the rules of the company would allow further additional margin calls.
Korean and Thailand exchange officials have said that they had no intentions of raising margins. Meanwhile, HKEX refrained from giving comments as well.
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