- DEUTSCHE BANK LOST ABOUT $150M THURS DUE TO SWISS FRANC VOLATILITY: SOURCE
- BARCLAYS LOST TENS OF MILLIONS OF DOLLARS THURS: SOURCE
- INTERACTIVE BROKERS GROUP SAYS "SEVERAL" CUSTOMERS SUFFERED LOSSES IN EXCESS OF THEIR DEPOSIT AMOUNTING TO APPROXIMATELY $120 MILLION, LESS THAN 2.5% OF CO'S NET WORTH
UPDATE: Knight Trading 2.0? Jefferies executive are reportedly on-site at FXCM discussing a $200 million bailout
As we first reported last night, FXCM was among the first of many retail FX brokers (and the largest) to see its clients suffer massive losses from yesterday's Swiss Franc surge following the SNB decision to unleash market forces. There are now at least 4 retail FX brokers (FXCM, Excel Markets, OANDA, and Alpari) who have announced "issues" but FXCM, being among the largest and publicly traded is the most transparent example of wjust what can go wrong when average joes are allowed 100:1 leverage. FXCM is now stuck chasing clients for money they do not (and will never) have.. and its stock is down 90%, trading a $2 this morning (down from $17 on Wednesday). As Credit Suisse notes, time is running out as regulators "tend to be impatient once capital requirements are breached."
The bad news is that as we also speculated, and as Greek officials tried to cover up as usual, the Greeks have resumed doing what they do best any time their country is facing a grand crisis: walking to the bank and withdrawing what little deposits they have left. Or rather running to the bank. Which brings us back to the topic of the Emergency Liquidity Assistnace, which as Kathimerini reported moments ago, at least two Greek systemic banks have reportedly resorted to, indicating that the liquidity situation in Greece is once again as dire as it was in the depth of the European collapse.
As a one-day upward move in a major currency its had few peers through history and is firmly in the top 10 of daily upward moves for any currency (vs the dollar) that we have data for which in many cases goes back into the nineteenth century. Most of the others in this top 10 are EM countries. So this is a rare event as when a peg gets abandoned and a big move ensues it’s usually a devaluation from a fixed rate system.What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination". The risk for the global financial system is that if the SNB can make such a dramatic u-turn could other central banks follow at some point. We're not so concerned here as their situation is arguably a lot different to the ECB. The ECB might actually look at the wider market moves yesterday and be scared to disappoint.
Today, the "developed nation" hecklers are deathly silent after what may be the biggest western central bank faux pas in recent history, and which has - perhaps for the first time in history - manifested in lines of people in front of currency exchange bureaus nowhere else but in that bastion of capitalism: Geneva.
Remember, years ago, when the markets were a mechanism for honest price discovery and a gathering place for buyers and sellers to participate in open, unvarnished capitalism?
"we venture that the SNB will sooner or later be forced to permit the franc to appreciate and thus to enrich the holders of low-priced, three-year call options on the Swiss/euro exchange rate. It's a long shot, to be sure--the options are cheap for a reason--but we judge that the prospective reward is worth the obvious risk." - Jim Grant, Sept 14th, 2014
It appears the Swiss National Bank decided to wait til they saw the whites of the eyes of the 'speculators'. The SNB's surprise decision to scrap the EURCHF ceiling has unleashed major pain across the hedge fund community as speculators, according to CFTC data, are the most short Swiss Francs (long the USD) since June 2013. Holding a huge 24,171 contracts short USDCHF futures (which surged 24 handles on the news) will not go unnoticed by the margin clerks...
Muppet Murder: Goldman's "Top #6 Trade Reco For 2015" Crushed, Stopped Out After 16.5% Loss In One DaySubmitted by Tyler Durden on 01/15/2015 14:21 -0400
It's a one-two for the muppet mauling masters at Goldman Sachs, who first crucified anyone who listened to the Buy Best Buy reco from Tuesday, and now, those who put their money into Top Trade #6 for 2015 by the Goldman uber traders, which was to Short CFH/SEK - obviously on margin - just got crucified after the unlevered pair just crashed 16.5%, stopping out those who listened to Goldman and sold CHFSEK to Goldman's prop, pardon flow, traders, and leading to a complete loss on margin, unless of course one has an infinite balance sheet.
We suspect there will be a few more "taps on the shoulder" tonight...
The Swiss National Bank just threw gasoline on Swiss F.I.RE. Expect to see combustive contagion in the Swiss banking, insurance and real estate giants as knock-on effects spread from so-called hedges
And to think so many otherwise very bright people still don't get it.
January 12, 2015: "We took stock of the situation less than a month ago, we looked again at all the parameters and we are convinced that the minimum exchange rate must remain the cornerstone of our monetary policy," SNB's Jean-Pierre Danthine.
January 15, 2015: "Recently, divergences between the monetary policies of the major currency areas have increased significantly – a trend that is likely to become even more pronounced. The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified."
Chaos was seen in financial markets today as participants were thrown a curveball with the SNB 'reset'. In just 13 minutes, from 0930 to 0952 BST, the franc collapsed by 30%. Swiss shares fell more than 12% - their largest crash since 1987. Stock markets around Europe fell with investors buying "safe haven" assets such as German bunds and gold bullion ...