* Australian and Singapore exchanges raise margins on futures
* Extreme Japan volatility triggers Nikkei futures circuit breaker
* Trade body working with dealers to smooth derivatives trading (Adds details on other exchanges, context, quotes)
HONG KONG, June 24 (Reuters) - The Australian and Singapore exchanges raised the cash firms must pledge to cover futures trades on Friday, and trading was briefly halted in Japan’s Nikkei contracts as Asia-Pacific bourses were buffeted by volatility linked to Britain’s vote to leave the European Union.
Trading margins, in the form of cash or securities, are pledged by brokers to exchange’s clearing houses, which sit in between a trade to secure transactions in the event either party goes bust.
Margin calls are usually made at close of trading, but clearing houses can call for extra margin during the day as a result of difficult market conditions caused by events such as the Brexit vote, which confounded the expectations of traders and bookmakers that Britons would opt to stay in the EU.
In a circular published early in the afternoon, the Australian Securities Exchange (ASX) said it was raising margins on ASX SPI200 futures contracts by nearly 40 percent with immediate effect and told market participants to prepare for a potential intra-day margin call.
Later in the day the exchange said it had also raised margins on the 10 Year Government Bond 6% Coupon futures contracts 20 percent “following today’s market events and the results of the Brexit referendum”.
Extreme levels of volatility in Japan’s Nikkei 225 triggered the Japan Exchange Group’s circuit-breaker calming mechanism for the first time since May 2013, suspending trading for 10 minutes in the morning. The Nikkei futures JNMc1 were down 8.1 percent by lunchtime.
The Singapore Exchange raised margins on the same contracts, which are also listed in the city state.
“SGX raised margins for its Nikkei futures contracts due to increased volatility, as part of its standard risk management measures,” a SGX spokeswoman said.
Reuters reported on Thursday that the SGX hiked margins on June 17 due to an expected rise in Brexit-related market volatility, while the ASX has warned traders of potential additional margin calls.
Asian currency, bond and equity traders kicked off an early day of choppy trading as counting in the UK referendum took place overnight.
“We expect markets to be hit with an immediate volatility shock. Markets have never dealt with an event like this before,” said Markus Schomer, chief economist for PineBridge Investments.
In Korea, the local bourse said it would strengthen monitoring of domestic and external market trends and work closely with local authorities to ensure market stability, but had not taken any immediate action, according to an exchange official.
Dealers and traders in Asia Pacific have also taken a series of precautionary measures in recent days, including raising the margins they charge clients and stress-testing trading systems, traders told Reuters on Thursday.
In a statement issued on Friday, the International Swaps and Derivatives Association (ISDA), which represents the world’s largest dealers, said it was working with members “to ensure the derivatives market is able to continue functioning safely and efficiently”, and added that Brexit did not immediately affect the legal certainty of existing derivatives contracts. (Additional reporting by Swati Pandey in Sydney; Dahee Kim in South Korea and the Tokyo markets team)
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