Oanda to halt FX trading during Greek election result
Oanda, one of the world’s leading retail FX brokers, has announced it will halt trading on Sunday as exit polls are released during the Greek election.
The firm says it will halt off-market weekend trading, which it describes as a “service for its clients rather than an opportunity to increase corporate revenues”, between 6.00 EST and approximately 15.00 EST. The outcome of the election is likely to be a key driver of near-term foreign exchange market direction.
The final two public opinion polls, before a black-out period was imposed, revealed that voting intentions do not appear to have altered materially from the inconclusive first poll on May 6, leaving the outcome from the second election highly uncertain.
Tony Savor, Oanda chief technology officer, says the decision to halt trading is “very much tied to the uncertainty in Europe and, in particular, the Greek election”.
“Given these events, there is the potential for extreme exchange-rate volatility at a time when global currency markets are closed,” he adds.
Savor says Oanda’s concern is that exchange rates could undergo sizeable fluctuations as the exit polls are being made public.
If those fluctuations are wide enough, accounts that under normal conditions would be considered well-capitalized could become subject to a margin call.
“By halting trading and holding the closing prices steady during this period, we aim to shelter traders from the potential for price spikes,” says Savor.
“Of course, once trading resumes, new market rates will come into effect and while the hope is that prices will have settled by this time, some accounts may still face the risk of a margin call.”
Other retail platforms have told EuromoneyFXNews they will remain open during the election, although they also advise clients to be prepared for wild price movements.