Breaking: IG Group Facing Losses up to £30 Million, Tip of Industry CHF Volatility Losses?
The first brokerage to publicly announce unforeseen losses from the extreme volatility event after this morning's Swiss franc debacle induced
According to a regulatory filing, the IG Group (LON:IGG) is facing up to £30 million in losses after this morning, the Swiss National Bank having caused excessive volatility on the foreign exchange market.
“The precise level of the impact will be partially dependent on the Company’s ability to recover client debts, but in total it will not exceed, from market and credit exposure,” the company said in a statement.
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The extraordinary market exposure occurred for the UK listed company because its clients’ orders were executed at more beneficial levels than the IG Group was able to get from its liquidity providers during the time of extreme market volatility.
The company will be presenting its results for the first six months of fiscal 2015 on the 20th of January, 2015, when it expects to provide additional details about the impact of the SNB action on the company’s business.
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Tip of the Iceberg?
Conventional wisdom has been that market maker brokers made out like bandits following the plunge in the EUR/CHF, as retail customer sentiment tools showed some firm’s clients at a 90/10 long to short ratio. Nonetheless, the immediate aftermath of the Swiss franc move has shown that nearly every broker is headed for a longer term mess regardless of whether they operate as a market maker or agency desk.
Feedback from brokers relates that a reconciliation nightmare seems to be in the works. As related by IG, brokers who executed trades for clients based on pricing of trades with their counterparties have encountered hedged trades being cancelled or repriced by their liquidity providers. Earlier today, Saxo Bank announced to its clients that executions of trades aren’t final and may be changed following confirmation of pricing with their liquidity providers.
In effect, what has appeared to have taken place is a massive ‘requote’ in the market. Mostly known for taking place between retail brokers and their customers, the table has been turned with brokers receiving word from banks that some of their trades with them have been cancelled. A letter to clients from one of the largest primary bank reviewed by Forex Magnates, stated that “significant issues” took place during the price drop and actual executions may not match that which was reported by their electronic systems. The result is that brokers who had filled customers, may still be on the hook for those trades with their counterparties after seeing trades with banks repriced due to initial rates ‘being out of the market’.
Due to the high percentage of clients being short the Swiss franc ahead of its rapid ascent, even among brokers who focus on market-making, many of them had hedged portions of their customer positions ahead of today’s move. As such, these CHF short positions are deep in the red for many brokers, and as seen by IG, may not be fully mitigated by profits due to customer losses.
Yes, it will get dirty with quite few brokers. I think banks withdrew their liqudity (look at the gaps), so even if A Book guys wanted to close out they couldn’t and their liability towards clients is limited. More losses to be reported.
Good for market makers thou? 🙂
IG have big balance sheet .so this is not a major issue for them . The platforms are running now and USDCHF is offered in trading now .. may be from now they may reduce the returns in the IG special Forex Products …
I would be interesting how the primary dealers quoted during the drop. Did they stop quoting all together or just very wide?
Made my day actually!
Wonder how FXCM and Fxpro did with their STP models? Didn’t see any announcements from them…
I was one of loosing traders. My stop lost was triger but executed ~2700 pionts below. Any advice ?
What about FCA? Can they give any support?
My account with fxcm is -ve 28k. thank you for your -ve balance protection.
However, caz you are stp, I am not sure who will pay that with your LP.
FXCM has not made a press release yet. That tells me they are done.
Is ther any hope that lack of liquidity providers during the time of extreme market volatility could be used agains the broker firms?
And is there a point with taking this to Financial Ombudsman Service?
Any advice will be much appreciated.
Ron, I think FXCM is down over 100 mill? What is your guess? as they are 100 % stp on fx. I wont be surprise if citi is negotiating to buy them out. I think citi is their PB.
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.
I wonder how IronFx traders faired out?
FXCM’s announcement – down 225M
http://ir.fxcm.com/releasedetail.cfm?ReleaseID=891597
No way FXCM lost $100M. I’d guess it’s more like 10-20, unless Lucid really fucked up.
Hi Shaun O and Looser – I am in a similar boat -22k on the back of eur/chf trade….have you managed to find anything out what our rights are with the FOS in claiming that loss back?
anyone trading with saxo bank? they are going to try ang get back negative balances frmoi retail traders? this will destroy the industry and eliminate margin trading if they succeed? will be a very nasty move by brokers to do this.
@retailtrader what do you mean by retail traders, us small or big boys?
@Shah I have made a formal complain with my broker about execution of my contracts. Awaiting response. 1st step with FOS.
Hi Losser and all other IG ac holder
I also have an IG ac and face the exactly same issue like you. Maybe we find more users and can coordinate our complains. My email is kklondon1982@gmail.com
Any news from ig regarding neg balances… Which in my strong opinion they caused.
Also email here for group action
Igeurchfloss@yahoo.co.uk
I have heard IG are going to go after negative balances. Shame on them. They delayed trading out and close people around 30mins after the event
Yes I have been contacted by IGMARKETS to have my balance paid off. They are being very ruthless asking me for upfront payment and have just asked to see my bank account to prove that I have no cash reserves to pay. I feel like I’m being chased by a Thug. I’ve joined Igeurchfloss@yahoo.co.uk
Guys….call in or email the FCA. I spoke with them and the more people that do it, the more likely some action on their part to fully investigate.
@Eisa Patel I spoke with FCA on Thursday 15th. They advice to make formal complain with broker. Which i did. My email for group contact is
Some brokers are ” reseting the neg balance account to zero”, why IG is not doing that? I never asked for credit when I set up the account.
Email for group contact is largetrade2015@gmail.com
I have emailed you losser
I’ve also emailed you Losser – I think there could be some legs in complaining as I don’t think I was ever means tested, and certainly, as a retail investor, should not have been given the lines of credit I have received.
Anyone have any updates on IG ? I heard they have been after negatuve accounts yday for European clients. UK clients possibly today
My complaint got rejected by ig compliance. Will need to refer to the fos or talk to credit team. But why does it feel that talking to the credit team will in turn mean accepting you are liable for the total loss?!. I wasnt aware that you can get into negative equity. My positions have always been closed out before it ever reached there. Its not been clear the extent of the potential loss. My losses exceed almost 55x what i had funded. How on earth can they assume such a loss is reasonable to push on to a retail… Read more »
Any IG updates from anyone? Why are they keeping so hush hush?
IG updates
They are picking off people one by one…..
@fighter what you mean. What IG have offered, if anything?
Hello,
There is a group for the same problem with Saxo Bank. They cheated. They closed our positions with a normal market price (they are market makers) and after 12 hours they changed the price with the bad excuse of the liquidity problem. If they had or not liquidity problem is not our responsibility. They are market makers and that is their business. Then we can not afford more losses and pay for their mistake also. Please join the group for the trial in Denmark against Saxo Bank S/A. Send an e-mail to: saxobankcheatedusersgroup@gmail.com
People that have lost with IG… Come to
IGEURCHFLOSS@yahoo.com
Large group already