Swiss Franc crisis: an update on brokers' losses

After the collapse of the Russian ruble, the Swiss franc joined the undesirable pack, causing carnage in an already fragile market. The last step of the Swiss central bank to remove the 1.20 EUR/CHF price floor has had adverse effects on the world markets.

The markets were affected in every way, both for retail and institutional traders who have suffered huge losses. In the midst of the crisis, some banks have stopped offering quotes for CHF currency pairs and others have greatly expanded the price quotations until rates stabilised on the foreign exchange market. The Swiss currency also affected the stock market of the country, which fell by 8%.

Most CFD brokers were forced to change their margin requirements for CFDs on Swiss equities and CHF currency pairs. But some brokers weathered the storm, the CFD brokers in the UK, ETX Capital and CMC Markets maintained their margins on Swiss equities.

This Forex Black Thursday will definitely cause significant financial damage and tarnish the reputation of the forex trading industry.

Here is a first look at this Black Thursday (Article automatically translated from our French partner - please excuse any grammar errors!):

IG Group - loss of CHF 30 million

IG Group reported a loss of 30 million pounds due to the volatility of the Swiss franc (CHF).

The loss is important, but easily absorbed by the dealer that holds more than 400 million pounds in cash reserves.

IG is currently looking to acquire clients of dealers who are unable to meet their regulatory capital requirements. The first broker regulated by the FCA has officially announced its insolvency Alpari UK.

FXCM - massive loss of $225 million

For FXCM and other STP brokers or those like IG with large positions covered francs, it is almost impossible to mitigate losses on their short positions in CHF with their bank counterparties.

At the time of the fall of the EUR / CHF and USD / CHF, clients with long positions suffered massive losses, with stop which are activated too late, and that increase losses.

All those who had greater than 8X their balance tomography lost all of their money. Many customers with greater leverage had their turn negative account balance.

Two companies were cited as providing poor performance for brokers Barclays and UBS are some trades that were profitable were therefore driven losses.

FXCM shares are in free fall today.

Excel Markets closes shop

Excel Markets suffered heavy losses, the broker is forced to close its doors. The company uses a model for STP send customer orders directly to its liquidity provider is responsible for profits and losses on account of the liquidity provider. The CEO of the broker, David Johnson, said the company has protected clients' money and clients balances will be refunded.

Interactive Brokers - loss of $120 million

Interactive Brokers Group, Inc. reported that due to the sudden volatility in the value of the Swiss franc, many of his clients have suffered significant losses in the amount of approximately $ 120 million, less than 2.5% of the net value of the broker.

Swissquote - loss of CHF 25 million

The Swiss bank has announced a loss of 25 million Swiss francs due to losses generated on client accounts. Swissquote maintains a strong capital, the company said that even after the provision of its core tier 1 capital amounted to 17%.

Alpari UK - Insolvency and loss of $45 million

Alpari (UK) Limited today confirmed its insolvency. The financial conduct authority said it is working closely with the company.

Many customers of the broker suffered losses that exceeded the value of their account. The broker will have to bear $45 million loss.

Plus500 reports profits

Plus500 confirmed that the announcement of the SNB had no material impact on the financial position of the company. The CFD broker added that it was actually profitable on the day of the announcement thanks to the strength of its risk management policies and processes that have effectively managed to limit the exposure of the company on the Swiss franc.

CMC Markets - no significant financial impacts

CMC Markets has suffered some losses, however, the overall impact, including bad debts have no material impact on the Group. The regulatory capital of 24% broker is solid and equity are higher than 130 million pounds.

All funds of retail customers are entirely separate and protected. CMC Markets continues to have a strong balance sheet.

Saxo Bank - no significant financial impacts

Saxo Bank is very little discussion of the Swiss currency pairs, although a number of clients have lost money in the movements of the past, others have benefited.

Saxo Bank remains in compliance with regulatory capital requirements and financial position of the CFD broker is healthy.

HotForex - no significant financial impacts

Their statement: "Following the decision of the Swiss National Bank to remove the floor of the Swiss franc and the subsequent spike in volatility, the market experienced a period of extreme lack of liquidity for trading pairs in CHF. This led to significant losses for many market participants.

We want to reassure you that HotForex works as usual and our risk management procedures have minimized the impact of this event.

We have remained true to our motto (honesty, openness and transparency). As evidence of our commitment to fairness, all negative balances have been cleared and all the customers who bought the CHF have been paid in full.

We are very proud of our reputation in the market and we are confident that after this event our reputation will grow even more."

Capital gain - no significant financial impacts

The forex broker said that based on its current exhibition, it is not expected to have to undergo a significant negative financial impact. It is interesting to note that the broker has increased the margin requirements for the CHF to 5% in September, which ultimately reduced the overall exposure to the currency.

XTB - no losses

The XTB broker has not suffered losses related to the volatility of CHF. According to the broker, clients were diversified to other financial instruments and very little exposure to the CHF.

OANDA - no significant financial impacts

The broker said it honors all executions of trades and cash withdrawals normally despite losses to cover customer orders flow.

Pepperstone - no significant financial impacts

The broker said: "business is conducted as usual, we keep our capital requirements beyond the regulatory requirements of the ASIC."

As an STP broker, Pepperstone probably also suffered losses due to customers with negative balances. However, the overall effect seems to have been limited because the company has limited exposure to events.

Dukascopy - no losses

Dukascopy Group suffered no loss through its prudent risk management policy and reducing leverage EURCHF 1:10 October 12, 2014.

LMAX - no significant financial impacts

LMAX has not suffered significant financial impact, the only MTF Scholarship changes were temporarily increase margins of 10% on the EUR / CHF and USD / CHF and 5% on other pairs with CHF.

FxPro remains solidly capitalized

According to a statement by broker FxPro, they continue to operate as usual. FxPro suffered losses, but the capital buffer was sufficient to absorb and model 100% STP remains solidly capitalized. All accounts with a negative balance remaining currently on the books of the broker are being corrected, the company is committed to protecting its customers against negative balances as indicated in the terms and conditions of the company.

AvaTrade - no significant financial impacts

AvaTrade announced that the volatility of the CHF had no material impact on the company. Financial position remains strong Ava. The broker risk management systems have been effective in managing the company exposure to the Swiss franc.