The Swiss National Bank’s move to abandon franc’s peg to euro turned out to be a shock for the market as EUR/CHF plunged by 30% on Thursday.
Many Forex brokers had big losses, because their clients’ positions have got wiped out.
FXCM Inc. reported that its clients now owe the company $225 million on their accounts. According to Bloomberg, FXCM warned investors last March that its risk controls were imperfect and can fail during the time of the extreme market movements.
Swissquote said that many of its clients were betting on higher EUR/CHF, and the fall of the pair “left the clients with a negative balance and has prompted the bank to activate a provision of 25 million francs.”
Alpari UK was hit the hardest as the company announced that it has entered insolvency. The broker assured clients that retail funds are segregated, in accordance with Financial Conduct Authority rules.
Some companies were better prepared for the crisis. FBS Markets Inc. reported that its financial state wasn't affected by situation. The broker has decided to work in the “Close only” mode for CHF currency pairs until the normal liquidity ratio restores on the market: customers can only close their positions, but not open the new ones. FxPro announced the suspension of CHF trading, but assured traders that it remains well capitalized.