Admiral Markets, a foreign exchange broker has detailed its emergency plan this Wednesday. This was following the record volatility of crude oil, with prices falling into negative territory on the U.S. oil market.
It has outlined to its customers that should any crude oil CFDs fall below US$5, it will enable ‘Close Only’. It will stop accepting new orders for the product.
Furthermore, should the price of any crude oil CFDs fall down to $0, the company will stop pricing these CFDs. It will close all positions at the current market prices, alongside cancelling all pending orders, the firm said.
The broker highly recommends carefully assessing your risk appetite as the situation surrounding the crude oil market is very unstable. It advises traders to trade responsibly.
Swap rates will remain volatile.
Admiral Markets: Swap Rates are Subject to Changes
The broker reminded investors who seek exposure to the underlying oil that Swap rates on spot CFDs are volatile. They are subject to significant changes for as long as the imbalance between supply and demand remains.
The FCA and ASIC regulated broker has imposed a maximum exposure limit of €20,000, or equivalent in another currency. This is for all spot and futures CFDs on crude oil.
Following the events of this week, Admiral Markets has made new futures CFDs available to clients with Trade.MT5 accounts. That is from the 22nd of April, 2020
CrudeOilUK_Z0 – Brent crude oil futures CFD, Dec 2020 and CrudeOilUS_Z0 – WTI crude oil futures CFD, Dec 2020
Admiral Markets is not alone in its attempts to protect its clients. It protects against risk from the historical price movements in the US oil market.
Some brokers have suspended trading in oil futures, while others, like Interactive Brokers, have suffered from large provisional losses. The broker has posted provisional $88m Loss from Negative Oil Prices. It said the anticipated losses will not have a material effect on its financial condition.
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