The global trading community was at the mercy of the Swiss central bank on the 15th of January, as markets tumbled pushing a number of trading providers to dangerous grounds, however there were no complaints from the country’s domestic stock exchange which reported record trading activity during the month. The total trading volume was up on a YoY and MoM basis reaching a formidable $196.2 billion. Swiss financial instruments were directly affected by the central bank’s actions, working in the exchange’s favor as activity spiked thus boosting commission and rebate earnings.
The trading venue surpassed a number of new records as trader interest grew during a historic month, the venue reporting its total trading turnover was $196.2 billon, thus signalling an increase of 59.1% against figures reported in January last year and a mammoth 85% spike from December 2014 metrics. The figures bolstered the exchange’s average daily volume figures which were just shy of the ten billion mark, reaching $9.81 billion.
The Swiss markets have had their fair share of vibrant activity over the last eight years, with 2011 seeing an upsurge in movements as a result of the SNB’s implementation of a floor in the EUR/CHF market. However, the unforgettable actions deployed on the 15th of January, 2015 resulted in new records in the single day value and volume of transactions executed. The exchange saw 949,988 trades executed through its systems during the day with an overall trading notional value of $29.89 billion. SIX Exchange reported that both figures were six times higher than the prior year’s daily average and that the venue’s previous records were 392, 587 trades in the number of orders executed in a single day in 2011 and a trading volume of $29.59 billion traded in 2007.
The CHF crisis will be recognised as an industry-changing moment that shocked the global financial markets. The after effects were seen in the retail forex broking market with leading providers such as Alpari UK, LQD Markets and Excel Markets filing bankruptcy due to liquidity issues and major executing brokers such as IG, Saxo and FXCM’s clients suffering significant losses. Banks and ECNs were also believed to be on the receiving end of bad news as a result of the crisis, with Citibank, Barclays and DB facing losses, according to media sources.
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The Swiss exchange managed to weather the storm from both a trading and infrastructure perspective, with the venue stating that its “trading platform functioned smoothly at all times.” Adding, “As usual, SIX was therefore able to ensure that trading was fair and transparent and investors were able to implement their investment decisions.”
Swiss equities suffered the single largest drop on the 15th of January as investors started to panic-sell from the outcome of the central bank’s actions. The index dropped to a 26-year low, not seen since 1989, and the total loss on the day was estimated at 105 billion francs.
The latest news of the domestic exchange coming out of the dilemma as a net benefactor will create hostility in an already uncertain market place, several practitioners having questioned the central bank’s move and particularly their manner of executing the policy.
One CEO of a leading forex broker proposed an alternative approach at the iFX EXPO Asia conference last week, suggesting that the SNB could have deployed the measures on a weekend thus giving affected participants time to think and address the issue during non-trading hours.