The swift action of the SNB to abandon it's defense caught forex dealers worldwide by such surprise that several notable dealers were inundated in adverse currency movements in the face of tsunami like price volatility.
According to Reuters today - read full article here -
http://www.reuters.com/article/2015/01/16/us-citigroup-forex-idUSKBN0KP26B20150116?feedType=RSS&feedName=businessNews
even a behemoth like Citibank got caught up wrong-footed in all the swirl of price volatility. Apparently Citibank, one of the biggest currency dealers in the world, had lost more than $150 million on thursday alone with the massive appreciation of the CHF.
Even more scary is the story that US based currency broker FXCM ran into severe liquidity trouble yesterday and needed $300 million in emergency funding to prevent it's collapse yesterday.
Read this article on DealBook http://dealbook.nytimes.com/2015/01/16/currency-traders-rattled-in-wake-of-swiss-central-bank-move/?partner=rss&emc=rss&_r=0
FXCM are supposed to be one of the better forex platform providers for small time traders and are listed on the NYSE - http://www.fxcm.com/
in a truly staggering fashion FXCM on Thursday dramatically imploded in a single day after the SNB led tsunami and its shares on the NYSE fell a much as a staggering 90% and trading nearly halted on news of financing with a senior secured term loan from Leucadia. After re-opening for trade for the Friday after hours session the shares of FXCM were up to around $4, which is about 70% down from its closing price on Thursday.
FXCM just released a press release - http://ir.fxcm.com/releasedetail.cfm?ReleaseID=891597
January 15, 2015
FXCM Comments on Swiss Franc Movement
NEW YORK, Jan. 15, 2015 (GLOBE NEWSWIRE) -- FXCM (NYSE: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.
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Considering that the small time trader is largely dependent upon forex trading platforms as such the events of the last 2 days were very frightening. But unlike the events surrounding Refco and Man Financial where traders saw their funds tied up it is a credit to FXCM that they secured bridge financing with such swiftness to stem the tsunami pressure upon its dealing positions. Smaller traders are literally at the mercy of their providers in demonstrating good governance and upholding trade liquidity. To the relief of many currency traders the avalanche did not quite bury FXCM thankfully.
Pieter Bergli - DeLoren Trust Holdings
Forex market education for traders
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