Following the collapse of SVB, eToro has implemented a limit on leverages for new positions. Existing positions, however, will remain unaffected.
The social trading network eToro has chosen to diminish the leverage permissible on new trading positions in the banking sector to a ceiling of X1, as communicated in a notice to its customers on Tuesday in light of the “current situation”.
This move arrives shortly after the failure of Silicon Valley Bank (SVB), a US-based lender targeting fledgling companies, which sent alarm signals among the US and global financial industry.
Another American bank, Signature Bank, was summarily shut down by regulators as a result of the scenario. Additionally, two days prior to the SVB’s demise, crypto-friendly Silvergate Bank withdrew its banking operations and arranged its assets in an “orderly manner”.
These happenings brought about a decrease in US bank stocks, with the First Republic Bank’s stock price diving over 60% on Monday. Even so, as established in the notice from eToro, the leverage limitation will only affect future transactions as existing ones will be preserved. Leverages on existing positions will remain unchanged.