Swiss franc shock takes toll on retail FX brokers

LONDON (Reuters) - The Swiss National Bank's abrupt move on Thursday to abandon its cap on the Swiss franc led to massive losses, and at least one insolvency, among retail foreign exchange brokers and trading houses across the globe.

Alpari UK

Online foreign exchange Broker Alpari UK said on Friday it had entered into insolvency after clients sustained losses on the Swiss franc. It said volatility and lack of liquidity had "resulted in the majority of clients sustaining losses which exceeded their account equity".

FXCM Inc

New York-listed FXCM Inc, one of the biggest platforms catering to online and retail traders of currencies, said it may be in breach of some regulatory capital requirements after its clients suffered $225 million of losses.

Global Brokers NZ Ltd

The New Zealand foreign exchange dealer was forced to close due to hefty losses incurred due to the SNB's policy reversal. It said the franc's move had wiped out the equity of most of its clients with franc positions and left it without the ability to meet minimum capital requirements of 1 million New Zealand dollars ($780,000). New Zealand's regulator is seeking a status update on client funds from the broker.

Swissquote

Online broker Swissquote said on Friday it would book a provision of 25 million Swiss francs ($24 million) after the surge in the currency's value left many of its clients out of pocket. It did not say on what basis it had calculated the provision.

OANDA

Global foreign exchange broker OANDA said it would pardon clients' negative account balances associated with the event, and vowed not to "re-quote or amend" clients' trades on the Swiss currency.

Saxo Bank

Denmark's Saxo Bank, one of the biggest players in retail foreign exchange trading, will potentially set different rates for transactions conducted after the Swiss National Bank's move. It said all executed client orders would be revisited and amended and that this "may result in a worse execution rate than the originally filled level". [ID: nL6N0UU52W]

IG Group

London-based interdealer broker IG Group, said many clients were able to close out their Swiss franc positions with IG more swiftly than the broker itself managed to close out its hedged positions on the currency in the forex markets. It forecast it would take a hit of around 30 million pounds ($46 million).

($1 = 0.6572 pounds)

($1 = 0.8771 Swiss francs)

($1 = 1.2832 New Zealand dollars)

(Reporting by Andrew Winterbottom; Editing by Ruth Pitchford)