CHF Crisis Revisited: How the SNB Decision Reshaped the Forex Market
- As the dust settles over the biggest crisis in two decades of retail OTC trading, our unique data suggests some interesting insight into how players all across the industry were, and still are, affected by the turmoil.
In a day that has become infamous with brokers and traders alike, January 15, 2015 saw the abrupt abandonment of the Swiss National Bank’s (SNB) currency peg, convulsing markets worldwide. When the Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term erupted with dramatic events unfolding one after the other, our focus was on breaking the fast pace news. Now, however, as the dust begins to settle and the new shape of the market takes form, a comprehensive in depth look is warranted.
Screenshot Forex Magnates' SNB Crisis Special Report
Sleeping at the Wheel?
Whether it was the lulled false sense of security earlier in the week by the SNB, further championing its currency peg with the Swiss franc and the euro at 1.20, or an outright absence of risk management by brokers, it is clear there were some very definitive winners and losers.
In a stroke of utter chaos, traders found their screens go dark as CHF trading seemingly went down at a variety of brokers, culminating in the absence of orders being filled and the crumbling of accounts into negative territory that has still not seen a resolution. Furthermore, industry mainstays like FXCM and Alpari UK found themselves facing bailouts and in the latter instance, outright insolvency.
Extreme Yet Foreseeable - The Swiss National Bank Crisis. Source: Forex Magnates.
Navigating Through the Price Chop
On the back end of the Swiss black swan event, concerned traders and market participants got a ticket to stress test their strategies and brokers. Additionally, brokers finally received the opportunity to stress test their technology, Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers and infrastructure.
The resulting mess will be discussed for many more months, while many legal cases could take years before resolution. The epic dismay across the industry from the event has once again exposed the short memory of financial industry participants when it comes to black swan events.
Winners and Losers
With the unfolding of events and the subsequent fallout, the industry has been forever changed with the memory of the CHF volatility burned into the psyche of traders and brokers worldwide.
The latest Forex Magnates Research report, "Extreme yet Foreseeable - The Swiss National Bank Crisis", recounts the game-changing event providing both the context of the event and the full data of the market movements it stirred. No less important, the report delineates the post-SNB forex industry with an eye on future developments . The exclusive and in-depth Swiss Franc Report is available now. To obtain a copy please contact sales@forexmagnates.com.
In a day that has become infamous with brokers and traders alike, January 15, 2015 saw the abrupt abandonment of the Swiss National Bank’s (SNB) currency peg, convulsing markets worldwide. When the Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term erupted with dramatic events unfolding one after the other, our focus was on breaking the fast pace news. Now, however, as the dust begins to settle and the new shape of the market takes form, a comprehensive in depth look is warranted.
Screenshot Forex Magnates' SNB Crisis Special Report
Sleeping at the Wheel?
Whether it was the lulled false sense of security earlier in the week by the SNB, further championing its currency peg with the Swiss franc and the euro at 1.20, or an outright absence of risk management by brokers, it is clear there were some very definitive winners and losers.
In a stroke of utter chaos, traders found their screens go dark as CHF trading seemingly went down at a variety of brokers, culminating in the absence of orders being filled and the crumbling of accounts into negative territory that has still not seen a resolution. Furthermore, industry mainstays like FXCM and Alpari UK found themselves facing bailouts and in the latter instance, outright insolvency.
Extreme Yet Foreseeable - The Swiss National Bank Crisis. Source: Forex Magnates.
Navigating Through the Price Chop
On the back end of the Swiss black swan event, concerned traders and market participants got a ticket to stress test their strategies and brokers. Additionally, brokers finally received the opportunity to stress test their technology, Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers and infrastructure.
The resulting mess will be discussed for many more months, while many legal cases could take years before resolution. The epic dismay across the industry from the event has once again exposed the short memory of financial industry participants when it comes to black swan events.
Winners and Losers
With the unfolding of events and the subsequent fallout, the industry has been forever changed with the memory of the CHF volatility burned into the psyche of traders and brokers worldwide.
The latest Forex Magnates Research report, "Extreme yet Foreseeable - The Swiss National Bank Crisis", recounts the game-changing event providing both the context of the event and the full data of the market movements it stirred. No less important, the report delineates the post-SNB forex industry with an eye on future developments . The exclusive and in-depth Swiss Franc Report is available now. To obtain a copy please contact sales@forexmagnates.com.