So I just got an email from my broker saying that they have no option but to widen the spreads on all pairs between the yen. They claim its because the currency hasnt been acting normal.
IS this standard practice or merely the broker attempting to make a quick buck off of a dreadful situation by further ripping their clients?
No one else has reported anything like that. My guess is your broker does not charge a separate commission, also is seeking to accumulate more profit from these pairs. No self-respecting broker would say that a cross is not behaving normal - there is no normal from the place fx world - as far as a broker is concerned, they simply should profit from the spread they receive from their liquidity supplier.
The broker is FXCast. The spreads on the USD/YEN were still sitting ar 4 pips, then the other day that they sent out the email notifying everyone of these:
due to the incredible and shocking events which happen in Japan the last days and still continuing the markets in which the Japanese Yen is involved are not behaving as normal.
Hence we must expand the spread of all pairs in which the Yen is involved until further notice. Please be conscious of this unnormal behaviour and the incalculable reactions of the markets.
I was somewhat shocked to see it (I dont trade the yen persoanly) however their spreads have jumped from 4 pips to 15 pips per trade.
I dare say there is alot of liquidity overlooking on the yen market side at the moment. So illiquid markets might cause liquidity providers to close up shop temporarily, thus effecting retail brokers.
I have not heard of any legitimate broker doing anything about it yet though. A few sc closed all yen positions and said no longer trading yen.
Mine is about 0.9-1.4 pip on USD/JPY - last few days following the intervention on JPY by central bank and Barclays Capital pulling of liquidity it had been pretty hectic, getting hit hard on retail on the 16. Nevertheless, it was normal after an hour or so happening any feverish condition.