Post FXCM’s official announcement of insolvency, the firm published a statement hinting that they might write off client’s negative balances. FXCM’s complication occurred as a result of the unforeseen removal of the 1.2 EURCHF floor by the Swiss national bank, leading to extreme market volatility. As of today, the promised announcement has been confirmed, for FXCM reaches decision to forfeit 90% of client negative balances.
Information regarding this will be passed to parties involved in certain jurisdictions within the next day or two, with their account statements adjusted accordingly.
CEO of FXCM, Drew Niv remarked that: “FXCM worked diligently to reach this decision and we are extremely appreciative of our clients for their patience and loyalty as we worked through this,”
This is mostly in favor of retail and small clients as this group was responsible for about 40% of the total debt incurred. The remaining minority of the group which represents about 10% of indebted clients, incurred over 60% of the total debt and will be required to redeem their deficit. These are composed of high-net worth individuals, institutional investors and traders with large capital. They will be contacted to pay their negatives “pursuant to the terms of the FXCM master trading agreements” as stated by FXCM.
Losses incurred during the Swiss catastrophic event is not exclusive to FXCM, as the Euro collapsed about 30% against the Swiss franc within a few minutes leading brokers, banks, hedge funds and other industry stake holders to record significant losses.