eToro reduces leverage on new positions in the banking sector amid the SVB crisis

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eToro, a social trading network based in Israel, has lowered the leverage that can be taken on new trading positions within the banking sector. Traders on the platform have been limited to maximum leverage of X1. The trading platform attributed the changes to the “current situation.”

eToro reduces leverage on new trading positions in banking

eToro has made these changes amid volatility witnessed in bank stocks following the collapse of Silicon Valley Bank. The bank’s collapse sent ripples across the US and the global financial sector. SVB was one of the largest lenders in the US, and its collapse marked the second-largest bank failure in the US.

On Sunday, Signature Bank was also shut down by New York regulators amid the situation caused by SVB’s collapse. Two days before SVB collapsed, Silvergate Bank also closed its doors. Silvergate Bank wound down its operations voluntarily and liquidated assets before the banking crisis started.

The closure of three US banks in a few days sent shocks across the US banking sector. On Monday, most bank stocks recorded massive declines. First Republic Bank was the largest loser after dropping by more than 60% on Monday. However, the bank’s shares notably recovered on Tuesday as market fears dropped.

eToro reduces leverage amid SVB crisis

The SVB crisis and the volatility witnessed in bank stocks might have been behind the changes announced by eToro. However, the trading platform noted that the leverage restrictions would only affect future trading positions, but all the existing trading positions would remain intact.

eToro is one of the leading social trading platforms, with operations in 140 countries. eToro is regulated in Cyprus, the UK, Australia and the US. It also supports multiple financial assets such as stocks, commodities, currencies and contracts for difference.

eToro supports the stocks of some of the largest banks in the US including Goldman Sachs, JPMorgan Chase, Bank of America and Citi. It also supports multiple other global banks, and the decision to reduce leverage could affect a large number of customers.

The trading platform noted that the decision to reduce leverage in the banking sector was necessitated by the ongoing situation in the US. The company noted that it would maintain this restriction until its risk management criteria allowed the platform to provide additional leverage.

The development comes at a time when eToro has been looking to expand the offerings available to its customers. Towards the end of January this year, eToro announced a partnership with a UK startup company known as Bridgeweave. Through this partnership, eToro sought to launch InvestorAI-US.

InvestorAI-US is a new smart portfolio that adopts artificial intelligence to give retail investors exposure to 12 high-growth companies in the US. The trading platform also unveiled Santiment to give retail investors exposure to companies listed in the United States that have made robust environmental, social and governance (ESG) efforts.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.