It is a “BLACK SWAN” event. SNB pulling off from its commitment yesterday is not only an indication that EURO is likely to go further down, but also an indication that no one can beat the market, not even the most reliable Central Bank of the world.
But we are not here to talk about the market, speculate where the trend is going, we are here today to discuss how much the brokers were not prepared for such an event which felt like test from the hell!
Only few hours after the SNB decision and the EUR/CHF plunge three large brokers IG Group, FXCM and Excel Markets announced that they “can no longer meet regulatory minimum capitalization requirements," due to "significant losses" suffered by clients which these brokers owe to their liquidity providers.
So what does this “Significant Losses” suffered by clients mean?
Forex Brokers Busted!
FXCM the total announced client loss is $225 million negative equity balance. The broker announced the following: “We are actively discussing alternatives to return our capital to levels prior to today's events and discussing the matter with our regulators.
GAME IS OVER FOR Excel Markets. New Zealand based broker announced: “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.”
IG Group meanwhile is in 30 million sterling loss and the company announced: “The precise level of the impact will be partially dependent on the Company's ability to recover client debts, but in total it will not exceed £30 million, from market and credit exposure.”
World dominant US based FXCM is in a big trouble...
In a public statement the broker sent the following main events to their shareholders and clients:
- CLIENTS EXPERIENCED SIGNIFICANT LOSSES AFTER SNB MOVE
- NEGATIVE EQUITY BALANCES OWED TO FXCM ABOUT $225M
- MAY BE IN BREACH OF SOME REGULATORY CAPITAL REQUIREMENTS
- ALTERNATIVES DISCUSSED TO RETURN CAPITAL TO PRIOR LEVELS
Since FXCM is a publicly traded entity immediately after the announcement FXCM stocks collapsed:
Spokeswoman of the NFA (National Futures Association) commented the following about the FXCM crisis: “We are in contact with the firm and the CFTC and have no further comment at this time”
Stay tuned. We will be following up on this topic and update our readers on constant basis.
The Industry Giant Alpari Uk shuts down its doors. Click here to read more.
Alpari UK - does not allow client withdraws. from their client portal when the WD is initiated they direct the clients to the following link.
What is happening elsewhere?
Read here the complete list of broker updates about Swiss Franc Crisis.
Do you have other relevant news, please share with us. We would like to hear your voice.