One of the world’s largest forex dealers, Citigroup, is believed to have suffered significant losses on the back of the Swiss central banks move to tamper with its affairs. Bloomberg reported that Citi lost over $150 million. The US-based bank was accompanied by Deutsche (DB) and Barclays, people familiar with the matter said. The Swissie dilemma has had detrimental effects on the derivatives broking sector with London firm, Alpari UK calling it quits.
Banks have kept below the radar when discussing their CHF exposure. The said bank’s losses are believed to be correlated to losses reported by retail aggregators who use banks for liquidity and prime brokerage services. Listed forex broker, FXCM, reported losses of $225 million but has since reported a bail-out package.
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Both Barclays and DB are believed to have lost considerable amounts but less than $100 million and $150 million reported respectively.
Swiss banks are yet to report of their exposure to the market, however discussions with senior traders reveal that market makers on the CHF came out strong, with the majority of traders holding long positions.
Institutional traders and buyside members have seen an influx in banks using last look practises to overpower their clients. One trader who commented on the basis of anonymity said to Forex Magnates: “Quite simply Banks are having the biggest last look ever, typical of the market today, they enter a risk market and when it goes against them they fail to honour the trades.”