Forex Brokers Prepare for Greek Default

Alexis Tsipras Talks With Finance Minister Yanis Varoufakis

Alexis Tsipras Talks With Finance Minister Yanis Varoufakis

As a major deadline approaches for Greece and the EU Forex Brokers are preparing for the worst. Many Forex Brokers have changed margin requirements for EUR crosses. Some brokers are already in the form of panic and have their trading set to close only on EUR positions. The outcome is so uncertain that even oddsmakers have stopped taking bets as to whether or not Greece remains in the European Union.

Forex Brokers are doing everything possible to avoid a repeat of the January 15 Swiss National Bank move that wiped out many brokers some are still feeling the effects six months later. The significant difference here is that the possible Grexit is hardly a surprise and has been telegraphed by markets and by governments for months now. The question remains that even with all of the preparation on the part of these brokers will the move be enough to minimize the impact on them.

For Forex Brokers the Greek situation offers no real winners or losers. Traders will most likely remain sidelined and watch anxiously for every new report and see if another deadline will come and go. Forex Brokers will do the same as they continue to try and limit their exposure to the crisis the best they can. This crisis will put the test changes and the approach brokers taken since the SNB move.

Aside from being a test for Forex Brokers and their customer, it will also be a test for the “Prime of Prime” model as well. Will Forex Brokers experience the “backing away’ from their counterparties as they did during SNB? Most liquidity providers have already laid the groundwork and there should be no surprises this time around.  Even when you try and prepare for the worst, the unthinkable can still happen. Hopefully, this time around the collateral damage will be minimal.