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Largest Retail FX Broker Stock Crashes 90% As Swiss Contagion Spreads
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."
FXCM crashes...
And the crashes some more as Credit Suisse suggests it's all over
We suspect there will be considerably more to come as CME's triple margin kicks in today...
* * *
So far 4 brokers have issues...
UK-based Alpari
From Alpari's 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.
This is what Alpari's CEO, James Hughes, who dubbed the SNB move as "horribly irresponsible", for obvious reasons now, said:
"I'm sure this isn't the last we'll hear on the subject and the SNB are going to be heavily scrutinised in the coming weeks for what appears to be a horribly irresponsible move on their part. For years central banks have tried to avoid days like today by being transparent and making moves like this over time while drip feeding their intentions to the markets. The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result."
* * *
FXCM is in trouble...
- *FXCM: CLIENTS EXPERIENCED SIGNIFICANT LOSSES AFTER SNB MOVE
- *FXCM: NEGATIVE EQUITY BALANCES OWED TO FXCM ABOUT $225M
- *FXCM: MAY BE IN BREACH OF SOME REGULATORY CAPITAL REQUIREMENTS
- *FXCM DISCUSSING ALTERNATIVES TO RETURN CAPITAL TO PRIOR LEVELS
FXCM an online provider of forex trading and related services worldwide, announced today due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses, generated negative equity balances owed to FXCM of approximately $225 million.
As a result of these debit balances, the company may be in breach of some regulatory capital requirements.
We are actively discussing alternatives to return our capital to levels prior to today's events and discussing the matter with our regulators.
* * *
National Futures Association is in contact with FXCM...
“We are in contact with the firm and the CFTC and have no further comment at this time”: Karen Wuertz, spokeswoman for the National Futures Association, the futures industry’s self-regulatory agency.
* * *
And Excel Markets is done (as ForexLive's Adam Button explains)... Forex broker Excel Markets calls it quits on SNB shocker
Clients of New Zealand forex broker Global Brokers NZ Ltd, which operates Excel Markets, have been told the company “can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business.” Client positions will be closed within the next hour.
Here is the statement (the emphasis, bolding and caps is theirs):
The dramatic move on the Swiss franc fueled by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in rare volatility and illiquidity. Both our primary and backup liquidity providers became unresponsive or illiquid for hours after the event. The majority of clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity. When a client cannot cover their losses it is passed onto us.
ALL OPEN POSITIONS MUST BE CLOSED BY 5PM NEW YORK TIME OR THEY WILL BE AUTOMATICALLY CLOSED AT THAT TIME. NEW POSITIONS CANNOT BE OPENED AS OF THIS TIME.ALL CLIENT FUNDS ARE IN SEGREGATED ACCOUNTS AND NEVER USED FOR LP MARGINS. 100% OF POSITIVE CLIENT EQUITY OR BALANCE IS SAFE AND WITHDRAWABLE IMMEDIATELY.
Global Brokers NZ Ltd. STP’s 100% of order flow and has sustained a total loss of operating capital.GBL can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business. Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those. Please note the interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker.
News of the impact of this event on companies and traders is just beginning to come to light. As Directors and Shareholders we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group.
We ask that you place withdrawal requests for your account balance at your earliest convenience and allow for minor delays as our team begins to experience higher than usual service volumes.
In my opinion, any broker that uses ALL CAPS deserves whatever they get.
We’re encouraged that client funds are segregated. They won’t be the last to go under on this and we hope that everyone has been prudent with client money.
* * *
Which likely explains the carnage after the market close today in EURCHF
* * *
Canadian firm OANDA says suffered loss on Swiss Franc move...
Brokerage says client enquiries, withdrawals and deposits are being handled as normal, according to a statement on its website:
In the wake of unprecedented market events this morning, OANDA demonstrated its ongoing commitment to doing right by its clients.Despite suffering losses and vanishing liquidity in the institutional hedging market, OANDA remained true to its 14-year legacy of transparency, integrity and fairness to our clients. 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.Client inquiries are being handled normally and those making withdrawals and deposits are able to do so as normal.OANDA is proud of its strong reputation for fairness and integrity. We thank our customers for their continued loyalty and welcome new traders who want to experience outstanding service and execution.
* * *
4 down - more to come...
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At least you could have sympathy for whining puppies.
The older I get the more I come to understand that those in power are often either corrupt or mentally retarded.
The following on realisation is that they didn't get to power by being mentally retarded.
Go and bankrupt yourself, you scumbag lowlife shit. What SNB did is for their own people good which is very rare for central bank. Look at what UK, US central banks do. They fuck & choke people over and over.
I'm not sure how putting Swiss manufacturers out of business overnight really does the people of Switzerland any good.
nobody's going out of business just yet... they might have a smaller profit margin, but there are remedies for that...
“As an entrepreneur in a small Swiss company, I like a challenge," he added. "Well, today, Mr President, your dramatic move helped step it up a notch: over 95% of our watches are sold to people outside of Switzerland, and the first retailers called the same day to cancel orders.”
“I trust you have a strong plan that will help all of us in the long run,” Meylan wrote. “Because otherwise, along with many other wonderful Swiss creations, H Moser watches may just have become very, very, very rare.”
http://www.swissinfo.ch/eng/soaring-franc-tests-mettle-of-smaller-firms/...
Blahblahblah... Just Sell Your Fucking Watches For Gold. Problem Solved.
Swiss contagion < ANAGRAM > Swan sings it - coo.
So how come FXCM started dropping on Wednesday?
Didn't you see Trading Places?
I don't see the problem with OANDA though, they refunded(!!) losing positions, wtf? That's an honest broker right there, they should totally use it for advertising purposes...i hope FXCM dies, scumbags got lucky getting this far. $225m, jesus fucking christ, an FX broker.
This could be interesting:
http://www.cnbc.com/id/102344021
What harm cold be done? I'm sure that there is nothing to worry about and all your assets are safe in our sound financial system. Now, why don't you grab a beer and watch the big game?
Might be a good idea to get a hard copy of assets.
American banking security? What's that?
Bruce Schneier's blog on security, googling with an emphasis on the words "banks" and "security"...
If i could turn back time . . .
Holy Ravioli
https://www.youtube.com/watch?v=kkPlk1T1Rjg
Who is going buy up all those Euro's now that SNB has given up
Belgium.
Sorry, rounding up a terrorist plot at the moment.
-- H. Poirot.
I smell paper burning. Fiat currency vol worse than bitcoin after Mt. Gox collapse. Derivatives on fire. Make a house of cards then light a match under it.
Fucking assholes. Central planning, once again leaving a trail of absolute fucking destruction.
END CENTRAL BANKING.
Fucking NOW.
I'm not sure how many more data points people need to see.
World's first central bank was created in Sweden in 1609. It still exists.
What do you think the odds are?
odds are that is wrong
... An agitated Asian exchanging yen for dollars at the FX window, asked the teller, "Uoooooooh, why so differen? Yesterday I get hunet nunty dorrar of yen. Today I get hunet sisty dorrar of yen. Why?"
Teller says, "Fluctuations".
Asian replies, "Uoooooooh, fruc you caucasians, too!"
that was funnie
Russian capital flight into swissy was the problem. After Cyprus, russians wanted no part of euro or USD. Payback can be dangerous.
Any of these fuckers advertise here through adsense?
FX brokers pay a bunch per click.
I wuz gonna pay two-fitty for FXCM.
Now, maybe one-fitty.
Maybe just fitty.
Maybe they should gimme two-fitty.
Latest avian flu strain is Black Swan Disease. Infects pigmen, transmits readily to sheeple.
Prepare to die. (does beat bleeding from the eyes via ebola, however, so there's that)
Functioning markets catch traders on the hop.
As one of the 50 million UK citizens subjected to the consequences of George Soros making money.
This is nice to see.
Do they actually produce something? FUCK THESE SCUMS!!!!
Sorry.... overreacted a bit /blushing
"Do they actually produce something?"
Misery, death, destruction.
All these little greedy shits crying for the theft they've been responsible for that should have included indefinite jail sentences for their crimes over many years the most important of which within the last 7 years alone!...
Behold and more importantly "beware" of the neutral country that has the copyright to international settlement that may have thieves among them, but that is practical and rational enough to come to it's senses first among them that they won't use their "funny money" any longer to finance balance sheets that don't exist and wars of choice that inevitably could start Armageddon!
Yes we can !
" Most of FXCM’s retail clients lost money in 2014, according to the company’s disclosures mandated by the CFTC. The percentage of losing accounts climbed from 67 percent in the first and second quarters to 68 percent in the third quarter and 70 percent in the fourth quarter. "
Nice odds !
Oh, but you see, now the smug brokers (who will call and call, until you pick up to decline, I know for fact), will be losing now too!
If you are looking for an open window to jump out of, let me lead the way, with a little push if you get indecisive in your last moments.
someone help me out here, in simple laymens terms what does a currency being pegged to another mean? What did the Swiss do with their franc to cause it to be worth 30 percent more on one announcement. Is it similiar to our fed coming out and just saying your dollars are now worth 1.30? Why dont we all just make our paper worth whatever the hell we want ? It is ink on paper anyway,, thanks all.
Because the swiss franc was appreciating versus the euro, the swiss bank decided to halt the appreciation a few years back to protect their companies from getting priced out of the market (the price of swiss products in euros kept going up). To hold a peg at 1.20, the Swiss national bank would sell swiss francs and buy euros. If europe then goes ahead and says they are going to print money like crazy, you have to vacuum even more euros up to hold the peg, potentially breaking the bank.
The swiss didn't do anything yesterday, they stopped doing (stopped buying euros).
In Layman Terms, it is saying:
"We can Control the Ebb and Flow of the Oceans".
We franc'd some fuckers.
And these are supposed to be smart people. All of whom were making a bet that tiny Switzerland could buy infinite amounts of Euro confetti coming out of Draghi's fire hydrant for the forseeable future.
I doubt over educated central bankers will ever wake up and realize that regulators are clueless and "macro prudential policies" are ineffective when their policies continue to provide free money to governments and corporations at the expense of the saver and bond investor.
If these polices continue, as looks likely, bet heavy on more deflation, more blowups, more volatility, and large market corrections. Global routs always begin with small events which cascade. This one may not be the one, but it is coming.
"......And these are supposed to be smart people. All of whom were making a bet that tiny Switzerland could buy infinite amounts of Euro confetti....
.....bet heavy on more deflation, more blowups, more volatility, and large market corrections. Global routs always begin with small events which cascade. This one may not be the one, but it is coming..
"Nuff Said".
My sincere advice to anyone desiring to profit from these death throes is to play the rallies and cover. Once the fun starts, the big boyz can't get out without tremendous rallies to lure the suckers back in. The game is going to be manufacture rallies and squeeze the bears. The easy money is to follow that game. Don't pick tops and bottoms, or short, make the easy money and cover.
"I doubt over educated central bankers will ever wake up and realize that regulators are clueless and "macro prudential policies" are ineffective when their policies continue to provide free money to governments and corporations at the expense of the saver and bond investor."
Your analysis assumes they are stupid and not just corrupt when you are awash in evidence of corruption. What makes you think these talking puppets care one iota about the saver or bond investor?
Does Allen Greenspan sound stupid now that he's retired and can say mostly what he wants?
No, they are not stupid, but they all went to the same schools and read the same books and think the same. Mario Draghi's professor was Stanely Fisher.
Alan Greenspan was the father of easy money. All that have followed are cut from the same cloth and believe easy money cures the world's ills. All it really does is create more debt to keep a debt ponzi scheme going. It requires inflation to survive and they think they can generate it via QE and ZIRP. It isn't working. If anything, it is creating deflation by encouraging excess capacity in the system (too much oil, too many empty apartments in China, etc).
Their books told them that they can grow by creating ever more debt and inflating away its burden via easy money. What is being proven in the real, non academic world, is that easy money creates asset bubbles and deflation in the real world.
live by the sword...die by the sword!
Phewww... I can still log in... for now...
<---- I won't get Corzine'ed.
<---- I will get Corzine'ed.
They got what they deserved. Anyone who trusts anything a central banker or politician promises is a complete idiot.
They are nothing but professional liars and con artists. And traitors.
The solution to this problem is obvious. We must invade Switzerland immediately ,install 123 military bases, 67 pipelines and start growing opium poppies at once! MeriKa fvk yea!
This is a 'Unthinkable happens' risk.
more: Reactions from 24 forex brokers http://www.forexcrunch.com/snbomb-reactions-from-10-forex-brokers
This being a Zero sum game, there are some really happy campers on the winning side of this transaction.
The question is, was Christine Lagarde "really" surprised about the SNB move or is "she" one of the happy campers ?
Where's the contagion? Bring on the contagion.
I know guy in London who had 20k shares of FXCM (he was once part-owner). His buddy had 100k. Tough day for these guys...
Risk! So GOOD to see you again!
you may think you are a rock star trader but when the other side cannot cover the losing side of the trade all you have are digital profits waiting for bankruptcy court to too you a few crumbs - can u say quadrillion $$ derivatives market?
Pentakillion $$ derivatives market I say.
How long before Jordan's head rolls at SNB? Will SNB scapegoat Jordan for this and:
1. Re-establish a new peg at say parity or less?
2. Learn its lesson and move on?
you think he did it on his own - naive
a new peg - naive
i think it's over mate
Now, all we need to know is the names of the insiders with prior knowledge of this monumental event who are out shopping for island palaces and Bentleys this morning.
good those Bucket shop will close at the end! remeber 1929 when playing the stock market was the easy thing to do and most secure until.... you know the end to that story. those FX desks are nothing but disguised bucket shops i am so happy i realized that and closed my account with Oanda a couple of years ago...
".......FX desks are nothing but disguised bucket shops......"
Precisely......
Yes, James Hughes, how horribly irresponsible for the SNB not to drip feed their intentions to you so you escape with all the profits in time and leave the Swiss people with all the losses. Yes, James Hughes, it turns out that YOU are the amateur.
"......how horribly irresponsible for the SNB not to drip feed their intention so you escape with all the profits in time.....
......James Hughes...YOU are the amateur.......
Indeed.....
Just currious people that were on the good side of these trades, how many will get nothing because the broker went bust?
Well, well, fine question, Sir.
FED? Remember TARP? Remember that billions were sent by Benny to Europe? Politicians cried "appalled", because they didn't approve it? The moral was this...The people who OWN the dollar, will do as they please. (hint: ownership since Dec 1913 was x-ferred from the political class, by their former political classes)
James Hughes, who dubbed the SNB move as "horribly irresponsible"
it all depends where you are standing jimmie.
cry me a river, jimmie
None of this is really about the Swissie but about the EUR and USD. If they were stable (like the MSM constantly tells us they are), removing the peg wouldn't have moved the needle at all. Everyone was in on the Swissie because it was the only "stable" currency in the world. Of course it was artificially stable and now these investors are finding out that reality is reality.
Prepare for impact. Just bought another load of physical silver this morning. :))
"The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result."
James Hughes, CEO Alpari
What a dishonest bunch of hypocritical bilge! This analysis assumes the SNB wasn't forced to do what it did because of the tsunami to come, and that the people who suffered didn't have it coming for being ignorant and arrogant gamblers.
I say let all the Whos down in Whoville go "Boo, hoo, hoo."
The Lesson that is Never Learned, only Repeated:
The Big Money is never Made and KEPT on the 'Obvious'......
but rather what the 'Obvious' is Sure to Cause, which is NOT so 'Obvious'.....
When Black Friday comes, I'll stand down by the door and catch the grey men when they fall from the 14th floor.
So if the GS got the muppet treatment...I guess that explains why I smell cookies baking and nail gun sales pegging the meter.
Now would be a good time to bring up the neutrality concept again.
Fx dealers going bust?
Who cares?
repo markets!!! rehypothecation!!!
why don't we get one of those geniuses from the NY FED to explain to us how sound the repo market is and how rehypothecation is not the ultimate ponzi scheme.
On one side is free world with freedom of speech and on other... well you know who ISIS & http://english.alarabiya.net/en/media/print/2015/01/16/Russia-says-Moham...
Fun fact: CIA aided, trained and financed elements of ISIS.
Googled your "fact" with search word "CIA fianced ISIS" First page opened up Russia Today :D yeah.... how objective is Russia Today we all know :D
We stop gunned some folks.
They are in talks with a bank for a 200 million rescue according to bloomberg. I hope they can sort something out. Their problem is liquidity, not solvency.
http://www.bloomberg.com/news/2015-01-16/fxcm-said-to-be-in-talks-with-j...
Fuck.
Them.
All.
from Briefing.com __________________
Putin regime goons reports they made mistake and fired GRAD on 4 civilians houses:
http://youtu.be/zjaL7ulGMhQ
This is war crime.
Yeah and Odessa was a simple mistake. This thread is about the USDCHF peg, yesterday's SNB move and its ripple effect. Russia is periphery at best. There will be another Putin post soon my pretty.
And this report is from city on which Putin regime goons fires GRAD:
http://youtu.be/l_lMVnXwe6k
This is how Putin regime goons is "liberating" Ukranians from goverment they have voted in open democratic way recognized by whole world even Russia.
"For years central banks have tried to avoid days like today by being transparent and making moves like this over time while drip feeding their intentions to the markets. The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result."
Says the guy who just went broke. Maybe if he hadn't been sponsoring soccer teams, he'd still have a few bucks to keep the lights on. But no, that isn't it, it's that the government didn't tell him exactly what to do, to make money haha good riddance.
I can still just about afford to shop at The Dollar Store - but the CHF Store is now out of the question...
I'm gonna miss those discount Toblerones....
Several large brokers have already defaulted as a result of the surprise shock therapy administered by the Swiss central Bank’s de-pegging of its currency from the dying Euro. Gold has surged and the Euro has been degraded even more than it already is. What is the hidden motivation behind all of this? Does the phrase “order out of chaos” ring a bell? Is it yet another central banking induced panic greasing the skids for additional money printing and power consolidation? Most importantly: Is any of this happening in a highly suspicious timing, simultaneously with the terror scare currently sweeping across Europe? READ MORE ABOUT THE FRANCOGEDDON HERE
I came across this comment that I thought I would share...
"The 'swiss peg' operated like a salvage tug, sent out to stabilize the huge oversized, unbalanced Euroliner that has been wounded below the water-line and dead-in-the water for long while now. This 'monetary salvage' operation pretended to work until the Euroliner kept sinking down below the waterline, and soon to take the tow line and panicked tug with it. The Swiss have finally signalled self-preservation at all costs despite the blowback. That is why the currency peg snapped. The Swiss tug did not want go down with the neo-titanic."
I think I agree, the whole "he who panics first panics best" thing. But who really knows..
BTFBD buy the fucking big dip
Franc(ly), I don't give a damn bitch. Just look at your (Derivative Partners). Go play doctor and fuck yourself up the ass with the Kenyon Nigger Obama. You can also download the Swiss Derivative Map. PDF files. SSPA data
http://www.svsp-verband.ch/home/swissderivativemap.aspx?lang=en
http://www.svsp-verband.ch/download/downloads/342_SVSP_MAP_E_2014_ANSICHT.pdf
and it's gone!
https://www.youtube.com/watch?v=-DT7bX-B1Mg
hey,... yen cross, there's moar to come--
making money is easy?
Question: Are phoney Swiss watches more expensive now?
Martin Armstong says " The same type of massive loss will unfold with the rise in the dollar, but this will be far more expensive to the world economy and will be one reason why we will see the next solution emerge after 2015.75 to move toward a one-world reserve currency."
https://www.youtube.com/watch?v=_nVk25ZvTkU