Amid the volatility of meme products, IG Securities Japan, a subsidiary of the IG trading group, has announced that it has increased margin requirements for Contracts for Difference (CFDs) on certain highly volatile assets known as "meme stocks".
IG Japan's decision will take effect today, May 15, 2024, at 21:00 Tokyo time, and is due to the recent unpredictability of the prices of these stocks.
According to FNG, the broker has decided to increase the maintenance margin rate for new and existing positions in individual stock CFD brands. This increase means that traders will now have to deposit a larger amount of funds to maintain their positions than before.
IG Securities has provided a list of stocks that will be affected by the maintenance margin increase:
1. GameStop Corp - 75%.
2. AMC Entertainment Holdings Inc - 50%.
3. Clover Health Investments Corp - 50%.
4. Lemonade Inc - 50%
5. Plug Power Inc (All meetings) - 50%.
6. Blackberry Ltd - 50%.
7. SunPower Corp - 50%.
8. Hertz Global Holdings Inc - 50%.
9. Tupperware Brands Corp - 50%.
IG Securities has issued an alert to its clients holding such positions, warning them that increased maintenance margin will be required due to the rate adjustment. Traders are advised to closely monitor their positions and accounts to avoid potential losses.
In addition, the company noted changes to the margin rate under the variation margin system, which gradually adjusts the maintenance margin rate based on the total number of positions held. Clients are urged to check the updated margin rates on the trading platform.
The company also warned that market spreads may increase significantly during periods of sharp price movements due to natural disasters, reduced liquidity at the beginning of the week or over the weekend, and following the announcement of key economic indicators.
The move by IG Securities is part of a broader effort to manage risk and protect the broker and its clients from increased volatility associated with meme stocks, ensure financial compliance and maintain market stability.
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