IronFX Taken to Court and the Depth of Alpari UK Debt Is Revealed

During the past week the stories that made the most impact in the industry involved allegations against IronFX being taken to a new level, the insolvent broker Alpari UK's debts to FXCM and Citi, and these two firms' responses to the CHF crisis. Over a month after the pivotal Swiss decision to drop the floor from under the EUR/CHF and the effects of the disruption in the FX market are still being revealed. On a positive note, a new way to make traders more focused and successful has been making waves with our readers.

Chinese IBs Challenge IronFX in Court

Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates has revealed that about 160 complaints against IronFX were filed on January 22nd with the District Court of Limassol. According to the allegations, IronFX has been denying withdrawal requests to over 150 accounts which the IBs brought onboard with the firm. The total amount of client funds mentioned in the claim is close to $1.25 million.

In part of a lengthy interview with IronFX CEO Markos Kashiouris, Forex Magnates asked about the case and whether it was related to bonuses. Kashiouris answered, “Indeed this claim is related to the recently identified group of abusive traders that employ an abusive trading strategy to manipulate our promotions."

“This group has been placed under investigation for breach of our trading terms and pending this investigation we have put a limitation on all promotions-related withdrawals from this abusive trading strategy as we are entitled to do.”

KPMG's Alpari Administration Fee Already Over £1.9 Million

According to a document released by Special Administrator KPMG, Alpari UK was already in the negative for the year ending December 31st, 2013, when it suffered losses to the tune of $9.7 million on a turnover totalling $86 million. Non-segregated professional client funds owed to professional clients amounted to $18.9 million.

Current liabilities of Alpari UK, excluding those to professional clients, amount to $34.5 million, while the total sum owed to the prime brokers of the company, Citi and FXCM, is approximately $11.4 million, of which $8.8 million is owed to Citi and approximately $2.6 million to FXCM.

The main dilution to the client fund claims is likely to come from the compensation charges which KPMG will receive as special administrator. As of the 13th of February 2015, the company has incurred costs of £1,921,160. These represent 4,144 hours at an average rate of £464 per hour.

FXCM on Track with Repayment Of Leucadia Bailout

In its quarterly earnings report, Leucadia National Corporation (NYSE:LUK) announced that it has already started receiving loan repayments from FXCM Inc. (NYSE:FXCM) after it provided a critical lifeline to the foreign exchange brokerage in the aftermath of the Swiss National Bank havoc.

The creditor company detailed in its earnings announcement that it expects FXCM to repay more than $75 million, or over a quarter of the loan, within three months from the announcement made in January.

The details provided by Leucadia National shed light on the progress being made by FXCM on its loan repayment. According to the agreement between the companies, FXCM would incur a penalty of $30 million if it fails to reduce the principal of the loan to below $250 million before the 16th of April.

Citigroup's FX Prime Brokerage Terminates Client Accounts

While reports of trading-desk losses from major banks from the Swiss franc Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term has filtered out, very little is known about how their prime brokerage-services units fared. The volatility though has triggered prime brokers to analyze the risk value of their customer bases, with many clients deemed dangerous having their accounts terminated or credit allowances cut.

The latest prime broker that Forex Magnates sources is reporting to have closed accounts is Citigroup. One of the largest FX prime brokers in the world, the company was believed to have been reviewing accounts following the SNB’s actions, with account terminations taking place as recently as last week.

Answering questions to Forex Magnates about their FX prime brokerage services and whether account closures were related to changes in their risk practices, a Citi spokesperson confirmed that accounts had been closed, stating, “Citi FX Prime Brokerage continuously reviews its accounts in the light of prevailing market conditions and service costs, and, in keeping with this regular practice, a small number of accounts have been off-boarded in the last week or two.”

Mind Over Matter

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