IC Markets Covering 90% of Client Negative Losses from Swiss Franc Volatility
- IC Markets has revealed to Forex Magnates that they have decided to forgive negative balances from the Swiss franc volatility for 90% of their customers.
IC Markets has become the latest broker that has decided to cover client negative balances. The decision to absolve clients who sustained negative balances from losses due to the Swiss franc’s volatility earlier this month has become a heated industry topic. On one hand, clients are in essence taking loans when they trade with margin with an obligation to cover the loan in the case of a loss. On the other hand, very few retail forex customers are aware that they could lose more than their deposit amount.
The question is especially an issue for brokers utilizing a straight-through processing model where each of their customer’s trades is hedged with external 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. As a result, client negative losses are losses that brokers have also absorbed with their Liquidity Providers Liquidity Providers A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi Read this Term. Failure to collect negative balances from their retail customers means they are sustaining an uncoverable loss with their counterparties.
In IC Market’s case, the firm made a decision to forgive negative balances for 90% of their clients. Overall, similar to other Australian brokers who have a large concentration of their customer base in the APAC region, IC Markets wasn’t believed to have held large exposure to the Swiss franc. The firm confirmed this to Forex Magnates, adding that franc exposure was also reduced when the firm decreased leverage in franc forex pairs in December. They added that the majority of their negative balance exposure was limited to three account holders.
IC Markets has become the latest broker that has decided to cover client negative balances. The decision to absolve clients who sustained negative balances from losses due to the Swiss franc’s volatility earlier this month has become a heated industry topic. On one hand, clients are in essence taking loans when they trade with margin with an obligation to cover the loan in the case of a loss. On the other hand, very few retail forex customers are aware that they could lose more than their deposit amount.
The question is especially an issue for brokers utilizing a straight-through processing model where each of their customer’s trades is hedged with external 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. As a result, client negative losses are losses that brokers have also absorbed with their Liquidity Providers Liquidity Providers A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi A liquidity provider (LP) constitutes either individual and/or institution that functions as a market maker in a given asset class. Broadly speaking, liquidity providers will act as the both the buyer and seller of a particular asset, thus making a market. In the equities space, many stock exchanges rely on liquidity providers who make the commitment to provide liquidity in a given equity. These liquidity providers commit to providing liquidity in the hopes that they will be able to make a profi Read this Term. Failure to collect negative balances from their retail customers means they are sustaining an uncoverable loss with their counterparties.
In IC Market’s case, the firm made a decision to forgive negative balances for 90% of their clients. Overall, similar to other Australian brokers who have a large concentration of their customer base in the APAC region, IC Markets wasn’t believed to have held large exposure to the Swiss franc. The firm confirmed this to Forex Magnates, adding that franc exposure was also reduced when the firm decreased leverage in franc forex pairs in December. They added that the majority of their negative balance exposure was limited to three account holders.