Deutsche, Interactive Brokers, Barclays Lost Hundreds Of Millions Due To Swiss Franc Volatility

Tyler Durden's picture

Yesterday, in the aftermath of the Swiss shocker, we tweeted what was quite obvious to anyone who realized that speculators were most short the CHF since the summer of 2013:

We have yet to find out just which hedge funds were blown up yesterday, but we already do know that numerous retail FX brokers did get blown up and as reported earlier, the largest retail broker FXCM is trading down 90% in the pre-market.

And now, thanks to Dow Jones, we start to learn just how much pain the bank themselves suffered:


This is just the beginning. Expect to hear horror stories when macro hedge funds finally clear up their P&L as a result of yesterday's mauling.

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mayhem_korner's picture

   <<< Tears of joy

   <<< Tears of sympathy

SickDollar's picture

This move by the Swiss National Bank is just the beginning.  Expect more desperate moves on the global economic chessboard in the days ahead.  But in the end, none of those moves is going to prevent what is coming.
And one of these days, another extremely important currency peg is going to end.  Right now, the Chinese have tied their currency very tightly to the U.S. dollar.  This has helped to artificially inflate the value of the dollar.  Unfortunately, as Robert Wenzel has noted, someday the Chinese could suddenly pull the rug out from under our currency, and that would be really bad news for us…




Haus-Targaryen's picture

Ivory Club here in Frankfurt was filled with grim faces and profanity yesterday at lunch.  

Made me lol.  

Publicus's picture

Wait till China re-value their currency like the Swiss did here, the USA will be bankrupt overnight.

XitSam's picture

Mildly interesting who lost. But who won in this move?

Occident Mortal's picture

Go on... Tell me how much did SOROS make from all this??


Who was on the winning side of all these trades?

Urban Redneck's picture

Tell that to Swiss people that I am today considering sending layoff notices to preemptively, and that I wasn't even thinking about at the beginning of the week. 

TheRedScourge's picture

Why lay em off, why not a paycut? Or why not just keep their pay where it is, chances are if you can afford a few European workers, them getting a raise for the short term ain't gonna break ya. This is what FX hedging is for.

Urban Redneck's picture

Given the contractual lead times in Switzerland for actually laying them off-- steps need to be taken now if the goal is to go into Q4 lighter...

btw- It's not a pay raise for them, groceries and rent are the same price they were last week, but the next contract we are about to deliver on provides USD 3M in revenue, which now buys a lot less CHF or employee paychecks.

F/X hedging is unnecessary and would be an ongoing expense (on top of the 1% in f/x fees that is already paid to bankers on incoming funds)- our revenues are USD and EUR.  Floating vs Pegging is a structural (long term) issue of monetary policy, how many YEARS out should I have hedged revenues exposure that I haven't even quantified (budgeted), and coughed up those expenses in the previous accounting periods?   

Since my salary is CHF 0 - so a pay cut isn't an option, and since my income is structured as dividends and revenue sharing on specific contracts - the flow of funds going into my safe just took significant haircut regardless of what is decided regarding the size of a workforce whose cost just exploded, but whose productivity hasn't increased.

LouisHill's picture

Thanks for that report Haus.

Crash Overide's picture

$150 million loss... pftttt  Jamie Dimon spends that much before breakfast on DOJ settlements.

glenlloyd's picture

Profanity? You don't say, in such a fine and civilized establishment, how unseemly.

giovanni_f's picture

What Putin never could have accomplished the SNB does almost effortlessly as if playing with matches. I am not sure whether they anticipated their decision to send shockwaves through the system but sure they know NOW they have possibly knocked over the first domino.

LawsofPhysics's picture

No risk, no reward.  Just leave the taxpayer the fuck alone.

XitSam's picture

LOL, ha ha ha ha man, that's a good one. You will be expected to bail out your profligate government. Otherwise the government would collapse. Then what would you do? Hmmm...

Quinvarius's picture

I am sure it is waaaay more that 100's of millions.

DeadFred's picture

We're getting the reports from two groups now, those who are insolvent and those who looked and said "whew, that's all we lost?" It's the middle bunch that are keeping silent that are the real concern. More walking financial zombies to deal with.

holdbuysell's picture

Any news on those who made a killing and are now buying small islands?

Haus-Targaryen's picture

I am kicking myself right now for not being long CHF.  Contracts were cheap and relativly risk free.  I mean, lets be honest -- the CHF will be around long after the EUR is going.  


Quinvarius's picture

You wouldn't get paid anyway.  These guys are folding up and walking away.

When rich people lose, they change the rules.

Vylahkinnen's picture

Ve still vant ze money or ve fuck you up!

glenlloyd's picture

You can be a winner and still be unable to collect....

XqWretch's picture

Yes I am curious of that as well... probably Swiss government officials who all went long just before pulling the plug

RaceToTheBottom's picture

Live by margin. Die by margin.
Any system that has small reserves and yet is so over-levered will eventually fail.

ThroxxOfVron's picture

Nassim Taleb, paging Nassim Taleb!

pelican's picture

Hmmmm. I wonder when the AIG and Citi explode from all those derivates. 


101 years and counting's picture

no biggie, cant the IMF guarantee those losses since it only costs the US taxpayer a few hundred million?

Dapper Dan's picture

Reminds me of this:

We read that the traveller asked the boy if the swamp before him had a hard bottom. The boy replied that it had. But presently the traveller's horse sank in up to the girths, and he observed to the boy, "I thought you said that this bog had a hard bottom." "So it has," answered the latter, "but you have not got half way to it yet."

by Henry David Thoreau

We have not yet hit bottom.

fuu's picture

A few hundred million is chump change at this point. They can pick that up loaning cash to the fed for 24 hours.

Seasmoke's picture

I'm going to rest of my money out of bank today. 3 day weekend scares me. 

PrayingMantis's picture



... swiss swatch bitches wished to be switched with twat bitches watching swiss swatch switches ... on the other hand, swiss watch witch-bitches wished to be swatch-switched with a swiss twat watch watching switch-twat switches ... or perhaps, the bitch swatch-witches would wish to watch which swiss watch bitches’ swatch switched twat?

... if you understand this you may proceed to analyze the SNB move unpegging its francs from the 'you're peein' euro ...

Dr. Engali's picture

Yes, but who, besides the Swiss citizens, are the winners? Somebody made a killing.

Tsar Pointless's picture

Aww. Pity party ensues in

FuzzyDunlop21's picture

This is the end of retail forex. .gov will use this as an excuse to limit what investments you can make with your money, just like the did with Dodd Frank. As usual, the liberties will be stripped from retail, not the big banks.

nicoacademia's picture

we all suffered (except if we have positive balance at the end of the day)

wmbz's picture

Funny how when all is percieved to be going well across the financial world we have a "global economy."

When there are ripples of financial negitivity across the pond then, we the USSA are just fine, no effect on us. That's their problem!

The MSM chatter monkeys are all over the place today...WE BE FINE!



RaceToTheBottom's picture

We have Corzine, they have orderly failures.

FUBAR is right.

Quinvarius's picture

Does grandma Yellen understand banking is a ponzi scheme she needs to pump money into all the time, yet?  Or is she going to let this thing come apart?  I hope the latter.  I will leave the lid off of my trash can so Warren and Charlie can eat out of it.

venturen's picture

no worries the FED will make them whole

Government needs you to pay taxes's picture

Did the fuckers @ Goldman Sacks get muppeted on this one, or were they tipped off?

geekz_rule's picture

no one actually connected lost a dime. this wasnt a surprise, except for the sheeple. this shit is managed. duh.

falak pema's picture

moar bonuses getting burned. 

Goody good shoes. Dimon next on the plate. 

C'mon lets see a home run. 

capltd's picture

No word on how much SNB made on the "surprise"?

Mike Honcho's picture

No problem, they are not over leveraged so those losses can be absorbed. /S      (as if I needed it)

huggy_in_london's picture

so its 120m of client money or 2.5% of IB's money??!!!  Well i guess they have to foot the bill when the "clients" dont pay!