The UK branch of the Alpari group, which is a foreign exchange, precious metals and CFD broker headquartered in London, has been forced to shut down it's UK arm due to the recent Swiss National Bank decision to unpeg the Swiss franc from the Euro. "The foreign exchange broker said in a statement that the move had created "exceptional volatility and extreme lack of liquidity".As a result, the majority of Alpari clients had 'sustained losses'." Source: BBC, "Alpari UK currency broker folds over Swiss franc turmoil" The article also stated that US based forex trading group FXCM also reported losses of $225 million due to the "unprecedented volatility" in the market, and shares in the company were suspended after it dropped by 90% in pre-market dealing. How long do you think it will take the market to stabilize again? How do you see the European market behaving over the next few weeks/months?
This is a perfect example of the risks inherent in the forex market. Yes, the Swiss National Bank surprised the market by its shock move, but people were clearly assuming that certain trades were guaranteed returns. Unfortunately, there will be a lot of people out of pocket after this and I wouldn't be surprised if we see a few more forex brokers go out of business.
This is the most unsettling thing I've read all year. I always thought Alpari seemed vulnerable, but FXCM has also been greatly impacted by this. I'm a little stunned by this news. thanks for the heads up.
That is a certainty. If FXCM is wobbling you can bet others are in even worse shape. The share of FXCM fell off a cliff this morning losing about 90% of their value. Not a pretty picture.
We're certainly starting to see the fallout. I've heard of one or two others that have been forced to shut their doors due to breaches in capital requirements, and the pressure of margin calls has hurt a lot of people.