Yesterday’s decision by the Swiss National Bank (SNB) to remove its trading floor of 1.20 francs per euro has convulsed the FX industry – however, ADS Securities’ Executive Managing Director Philippe Ghanem has seen this as an opportunity for the industry to work together.
Indeed, yesterday’s landmark decision by the SNB resulted in a number of winners and losers, with FX brokers like FXCM incurring a $225 Million client negative balance hit – they were not alone.
Despite the shut down of CHF pairs by most FX brokers for lengthy periods yesterday, ADS Securities reported a record trading day helped in large part by its technological solutions and awareness, and its decision to not shut down its own CHF trading.
Perhaps more importantly, this brings into question the level of preparedness many brokers and firms are employing so that future episodes of chaos like yesterday’s event can be avoided.
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History Favors the Prepared
According to Mr. Ghanem in a recent statement on the yesterday’s fallout, “Yesterday was not a good day for our industry. We tried to do everything we could to stay with and support our clients, trying to get the best price we could to them as EURCHF fell by 30 per cent. But traders, banks and brokerages were all hit extremely hard. The modern FX industry has been developed around state-of-the-art, fast electronic systems and when an announcement of this scale hits the markets, the shockwaves are instantaneous and global.
In the next few days, weeks and months we will see regulators, central banks and financial companies looking at the way things unfolded and how the risk was managed and handled. Unfortunately, as they sit down to discuss what happened a number of brokerages will have already closed and many thousands of clients will have lost significant amounts of money.”
“The FX industry is now highly sophisticated and has moved from being a boutique operation to a trillion dollar asset class. There are huge volumes and great volatility and it is no surprise that an announcement of the magnitude of the SNB’s produced these results. It is only through our investment in technology and great team work that we were able to maintain our position and avoid any losses,” added Mr. Ghanem.