SNBomb – Reactions from 12 forex brokers

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The shock move from the Swiss National Bank has significantly impacted foreign exchange and also foreign exchange brokers. We already noted how such events are tests for brokers. And now, here is a round up of 12 reactions (updated)

This is only a partial list giving you an idea of the range of responses: from making profits / business as usual, through taking losses, revisiting positions, suffering capital shortfalls and up to outright insolvencies. Here goes:

Here is the updated list, now in alphabetical order for your convenience:

  1. Alpari UK: The firm has entered insolvency. Here is the statement:The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. Retail client funds continue to be segregated in accordance with FCA rules.- See more at: Important announcement
  2. Excel Markets: This not really globaly known New Zealand based broker had to shut down. It was unable to meet client losses held at its liquidity providers.
  3. FXCM: “the company may be in breach of some regulatory capital requirements” as they were hit by a massive $225 million client negative balance. The publicly listed broker said that is “actively discussing alternatives to return our capital to levels prior to the events”.
  4. FxPro: The broker announced the suspension of all CHF trading. No problems were reported. From the firm:FxPro Group announces that negative balances resulting from yesterday’s extreme market conditions on CHF crosses have not affected the funds of our clients. All such losses were borne solely by the capital the company places as collateral with its prime broker and liquidity providers, as per our responsibility to protect our clients and comply with regulatory requirements. Our commitment to negative balance protection as outlined in our terms and conditions has been upheld. All negative balances still appearing on the terminals of our clients are in the process of being corrected. While the company has been affected by the events of what is now being called Black Thursday, FxPro remains fully operational and solidly capitalised, as ever. It is business as usual: deposits, withdrawals and the entering of positions continue as on any other trading day. The funds of our clients remain segregated and the protections afforded to them by our true agency model execution, which are now more important than ever, continue to prevail.
  5. Gain Capital: (forex.com) “no material adverse financial impact”. They note that they increased margin requirements on CHF to 5% back in September.
  6. IG: The group was the first to come out and they announced that they may be facing losses of up to 30 million pounds.
  7. Iron FX: The Cyprus based broker reports “business as usual”. Here is the statement: “IronFX Global Limited was not affected by these events due to our strong risk management systems and procedures and we continue complying well with our capital regulatory requirements under all regulatory bodies we have licenses. We would therefore like to inform our clients that we continue conducting our business as usual. Feel free to contact our account managers around the world should you have any questions”
  8. OANDA: Released a statement about honoring all trade executions and will be issuing withdrawals as normal. They have been suffering losses as liquidity vanished but state: “OANDA did not re-quote or amend any CHF cross client trades. We even took the further step of forgiving all negative client balances that were caused when clients could not close out their positions fast enough”.
  9. Pepperstone: “business as usual” – They state that they hold capital “well in excess of our ASIC regulatory requirements”.
  10. Plus500: “no material impact’. The broker also said that it was in fact profitable for the day, thanks to the robustness of its risk management policies.
  11. Saxo Bank: They say that they will revisit Swiss franc trades and that “clients may suffer”. All executed fills will be revisited, ammended and this may result in a “worse execution rate than the originally filled level”.
  12. Swissquote: They set aside 25 million CHF due to Swiss Franc volatility.

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Next week will be even worse (especially for the brokers that are allowing 1:500 to 1:3000 leverages - they are going to be wiped out)

 

That is not the whole list

A lot of brokers still did not report that they are in the same s...t

 

Wow. The state of affairs is going to change significantly soon!

 
jotekfinance:
Wow. The state of affairs is going to change significantly soon!

It is changing each day now. Some brokers have shown their true nature now

 
techmac:
It is changing each day now. Some brokers have shown their true nature now

This certainly changed our view of the brokers world a lot

 

Swiss Turmoil Spreading in Europe as Saxo, Credit Suisse Hurt

Credit Suisse Group AG (CSGN) and Saxo Bank A/S joined the list of European financial companies warning that the abrupt end to the cap on the Swiss franc may hurt their earnings.

Credit Suisse, Switzerland’s second-biggest bank, indicated Monday that currency swings may hurt profit, depending in part on “any offsetting management actions.” So far the volatility in foreign exchange has “not materially impacted” capital ratios, the Zurich-based company said.

“Swiss bank earnings will be significantly lower,” said Andreas Venditti, a Zurich-based analyst at Vontobel Securities AG. “The impact will depend on how quickly the companies can react and how in-depth their actions will be. The whole thing isn’t over yet.”

In the hours after the Swiss central bank on Jan. 15 scrapped a three-year-old policy of capping its currency against the euro, the franc soared as much as 41 percent against the euro and strengthened against other currencies. Francs make up a larger share of costs than revenues for many Swiss banks.

Julius Baer Group Ltd. (BAER), Switzerland’s third-largest wealth manager, said it plans to take “appropriate measures” to defend profitability from the stronger franc. The bank said it didn’t suffer losses in the two trading days after the SNB move.

UBS Group AG, Switzerland’s biggest bank, hasn’t commented on the effect of currency swings since the Swiss National Bank’s decision.

Citigroup Inc. (C), Deutsche Bank AG and Barclays Plc suffered about $400 million in cumulative trading losses, people familiar with events said last week.

Copenhagen-based Saxo Bank said it may incur losses because some clients don’t have enough collateral to cover their losses from trading the franc. The lender said it will still be able to meet its regulatory capital requirements even if it cannot recover losses.

In the U.K., IG Group Holdings Plc, a spread-betting company, said Tuesday it expects losses from the sudden rise in the franc not to exceed 30 million pounds ($45 million) after “a few hundred clients” were hurt.

The country’s market regulator has written to about 90 brokers seeking information on possible repercussions from the franc moves, a person with knowledge of the matter said.

Alpari (UK) Ltd., a foreign-exchange broker that sought a rescue plan after it was buffeted by last week’s market rout, has gone into administration after it failed to find a company willing to buy it out.

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theNews:
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[*] FXCM: “the company may be in breach of some regulatory capital requirements” as they were hit by a massive $225 million client negative balance. The publicly listed broker said that is “actively discussing alternatives to return our capital to levels prior to the events”.

Leucadia National Corporation extended a $300M loan to FXCM, and the funds have been applied to meet our regulatory capital requirement.

FXCM continues normal trading operations, and traders can continue to trade, deposit, or withdraw as always.

 
UBS Group AG, Switzerland’s biggest bank, hasn’t commented on the effect of currency swings since the Swiss National Bank’s decision.

:):)

That should be the punchline

 

UBS Had No Loss in Turmoil After SNB Scrapped Franc Cap

UBS Group AG (UBSG), Switzerland’s biggest bank, said its trading businesses didn’t suffer a loss in the market turmoil that erupted when the Swiss central bank surprisingly scrapped its limit on the franc.

“In aggregate, UBS did not experience negative revenues in its trading businesses in connection with the announcement,” the bank said in a statement Friday. It said it will provide further information on its outlook for the first quarter when it releases fourth-quarter results next month.

The Swiss National Bank’s announcement on Jan. 15 sent the franc soaring as much as 41 percent against the euro. The exchange rate has since been close to parity.

Credit Suisse Group AG (CSGN), Switzerland’s second-biggest bank, has also said it suffered no “material” trading losses linked to foreign-exchange volatility after the end of the cap.

UBS shares rose 0.9 percent to 15.03 francs at 9:02 a.m. in Zurich. They have declined about 11 percent since the central bank’s decision, paring some of the 17 percent losses in the two trading days after the ceiling was abolished.

The stronger franc may push down UBS’s profit 14 percent, while Credit Suisse could suffer a 15 percent drop, Barclays Plc (BARC) analysts led by Jeremy Sigee said in a note to clients after the SNB decision. Citigroup Inc. (C), Deutsche Bank AG and Barclays are said to have suffered $400 million of cumulative losses from the Swiss central bank’s decision to end the cap, people familiar with the move said last week.

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Saxo Bank Reveals Damages Caused by 'SNB Tsunami'

Saxo Bank faces potential losses of up to $107 million as a result of the Swiss National Bank's (SNB) decision to end its currency cap against the euro, the Denmark-based retail forex broker said in a statement late on Friday.

"A number of Saxo Bank's customers ended up with insufficient margin collateral to cover their losses on positions in the Swiss franc and some customers will not be able to settle the balance in full and the bank will incur losses in this respect," the statement read.

Taking the estimated maximum loss into account, the total capital of Saxo Bank Group would be 2.15 billion Danish crowns ($324 million), while its total capital requirement is 1.71 billion crowns, the bank said.

However, the firm pointed out that, even if no collections take place and it takes the maximum possible loss, it will remain capitalized well in excess of regulatory requirements. Taking the estimated maximum loss into account, total capital at Saxo Bank A/S would be 1.97 billion Danish crowns, while its capital requirement is 1.46 billion crowns. At parent company Saxo Bank Group, total capital would be 2.15 billion crowns while its capital requirement is 1.71 billion crowns.

Hurt by SNB

On January 15 the SNB shocked markets by announcing that it would abandon its currency peg of 1.2 Swiss francs to 1 euro.

Following that move, the franc rapidly appreciated in value, gaining as much as 41% against the euro at one point, and put entities ranging from currency brokers to hedge funds under major stress.

Losses from the 'Swiss shocker' nearly killed brokerage firm FXCM, while IronFX is in talks to buy fellow online forex broker Alpari UK, which was forced into administration after suffering heavy losses induced by the SNB decision.

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