Dear Valued Client,
Following on from the recent notifications regarding extreme market volatility and global trading conditions we would like to update you further around some specific risks posed to market participants.
Please note that our XAUUSD is available for both opening and closing position now. However, it is recommended to carefully evaluate and make sure you are aware of the risk in the market you are facing:
1. It is possible that you would experience liquidation due to the extreme fluctuation in the market, which leads to widening spread and causes huge floating loss.
2. The request of your trade may not be able to execute while the liquidity is low.
3. To protect our clients, we may choose to close the quoting of XAUUSD if there is extreme volatility in the market until the pricing is back to normal.
If you choose the trade in the current circumstance,we will consider that you have completely understood and accepted the risk that you are facing, including inevitable situations the following but not limited to widening spread and quotation halts.Or you can choose to trade when the global market regains stability and the market returns to normal.
The global lockdown is affecting the way that XAU markets are being priced by all brokers, banks and liquidity providers.
All indications from the interbank market (as well as several non-bank venues), are that the issue currently been experienced in the Spot / Futures XAU market may not be resolved for some time.
One of the key drivers of the dislocation is arising from the exchange for physical ‘basis’ having been closed.
Refineries in Switzerland have also shut down and physical delivery of Comex Gold has been made nearly impossible because of flight restrictions, making it harder to physically deliver bullion to cover shorts.
We also expect to see this difficulty stretch to other precious metal markets and potentially, other commodities.
We are not expecting pricing / liquidity to resume to more normal levels for a number of days but will do everything to work with our LPs to ensure the best possible pricing and execution for our clients.
We continue to see wide spreads and extreme volatility in currency markets, with the USD falling after the U.S. Federal Reserve announced an unprecedented scheme of credit support to help the United States economy whilst full lockdown is being implemented in several states across the nation.
Other Reserve Banks around the world are moving to push massive amounts of liquidity into the market and volatility is spiking on the back of these news announcements.
It is important to understand that these conditions are caused by the extraordinary events we are seeing around the world and uncertainty in global markets is impacting trading conditions at all brokers and financial institutions.
We have adjusted our spread filters and maximum spread settings to ensure that pricing is available for all of our markets