Cyprus Brokers Lost Millions with SNB Black Swan Event


29 January, 2015 | AtoZ Forex — After the Swiss Franc Black Swan event swept away major industry players globally, Global regulators started to tightly monitor losses occurring to their regulated brokers. Today CySEC, the Cypriot financial services regulator has issued a statement regarding the stability of the regional brokers.

Cyprus based Forex watchdog CySEC announced that total losses occurred to the CIF licensed brokers was limited to EUR 42.5 million. Of the 182 CySEC regulated financial institutions only 24 suffered losses while 158 faced no losses from the SNB’s 15 January 1.20 floor scrapping decision.

No capital adequacy issues

According to the official CySEC announcement none of the registered institutions reported capital adequacy issues. Not only that CySEC brokers’ saw a jump due to the unstable conditions of global STP giants.

The report continues that of those 24 brokers which took a relative hit by the SNB decision, all have an equity and capital adequacy ratio above the required minimum according to the regulatory standards.

Losses experienced by those of Cyprus based brokers resulted mainly due to the negative balances occurring on retail and institutional customer accounts due to the leverage and interrupted order flows balances due to the extreme volatility as the SNB took the market by surprise on the 15th of January.

SNB casualties

As the Swiss Black Swan event had a tsunami effect in the market a number of global industry players were swept away. Among the main industry players Alpari UK, FXCM and Boston Prime were the biggest ones. Alpari UK went under special administration set by the UK regulator FCA while FXCM managed to avoid the catastrophe by a very close call by getting $300 million loan.

Boston Prime, however, has only announced their bankruptcy just today and it is not quite clear yet on which direction the market will be evolving. But it is certain that a number of financial firms will be hit by Boston Prime and Boston technologies as they were among the largest FX solution providers in the industry.

However, the situation was rather different in Cyprus. Local Market making brokers such as XE markets, Easy Forex, Orbex, IronFX and others started to receive increased business thanks to their fallen competitors.

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