FXCM Is First Casualty of Latest Round of Central Bank Stupidity
By LawrenceFXCM made a press release regarding their clients losing so much money due to the dramatic move in Euro / Swiss Franc that they owe FXCM approximately $225 million dollars.
http://ir.fxcm.com/releasedetail.cfm?ReleaseID=891597
FXCM will likely survive this but what about the other forex brokerages?
We will probably learn who else took a big hit over the weekend.
Comments
Alpari UK entered into insolvency
http://www.alpari.com/company-news/posts/2015/january/important-announcement
HY Markets, pretty much the biggest in terms of presence in Asia, says it is ok.
http://blog.hymarkets.com/forex-trading/urgent-company-statement-swiss-franc-movement-chf.html
An NZ FX broker went in insolvent and closed its doors the day after SNB activities….
It was an immense and very very swift move. Interactive Brokers stopped quoting for a while, Oanda stopped quoting for a while, and I read Deutsche Bank Autobahn quoting system stopped working for some hours. They say the move was unprecedented but I don’t know about that. All I do know is that it is the second time in my 10 years of FX trading that I have seen extremely large moves happen in minutes. The last time I saw similar type movements was back when SNB announced the EUR peg in 2011. Real account breaking potential for the many many risky FX traders out there.
It’s a 30% swing of the face value. Even a non-leveraged position will take 30% hit.
Using 3x leverage the money backing the position will be wiped out.
Something similar happened to the Russian bond mkt back in 1998 and that cleaned out LTCM. I still remember that the posted quotes (because it is a dealer market) disappeared and next thing you see an hour later is a haircut of 50%
Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund
http://www.bloomberg.com/news/2015-01-17/swiss-franc-trade-is-said-to-wipe-out-everest-s-main-fund.html