SGX raises minimum cash buffer for trading firms ahead of Brexit

 A Singapore Exchange (SGX) sign sits outside its premises in the Central Business District of Singapore.
A Singapore Exchange (SGX) sign sits outside its premises in the Central Business District of Singapore.PHOTO: REUTERS

HONG KONG (Reuters) - Singapore Exchange said it has raised the amount of cash firms must pledge to cover trading positions due to an expected rise in market volatility linked to Britain's vote on whether to exit the European Union.

SGX is the first exchange in Asia to publicly warn on the risk of increased trading margins, although several others including the Hong Kong Exchanges and Clearing and the Australian branch of London Stock Exchange Group-owned LCH have privately told dealers they may also hike margins or require additional intra-day margin calls, traders told Reuters.

"SGX has been assessing the potential impact of the UK's referendum on the country's EU membership," Agnes Koh, chief risk officer, SGX told Reuters.

"Given the potential for increased market volatility, we have taken the precautionary step to introduce higher margins for contracts, including those with material open interest."

SGX, which raised margins on June 17, said it would continue to monitor market developments and may make further adjustments if needed.

A spokesman for LCH, which clears over-the-counter derivatives in Australia, declined to comment on discussions with clients, but said the company's rules allow it to make additional margin calls.

HKEX declined to comment.

Britons will decide the future of their country and Europe on Thursday (June 23) in a vote on European Union membership after a bitter campaign that appeared to divide the nation down the middle.