Banking giant UBS is in discussions with clients who suffered significant losses on complex foreign exchange (Forex) derivatives following market volatility triggered by President Donald Trump's tariff announcements, according to people familiar with the matter.

Hundreds of Millions in Client Losses After Trump’s Market Turbulence

The world's second-largest wealth manager is considering compensation for certain clients who invested in sophisticated currency products that performed poorly when Trump's tariff proposals in early April sparked dramatic currency movements, particularly strengthening the Swiss franc against the dollar in its largest monthly gain since 2015.

Several hundred UBS customers, primarily in Switzerland, have experienced substantial investment losses collectively reaching into hundreds of millions of Swiss francs, one person with knowledge of the situation said, requesting anonymity due to the sensitive nature of the discussions.

“The extreme volatility in the markets of the last few weeks has impacted certain investments,” UBS acknowledged in a statement sent to Reuters. “The vast majority of our clients hold diversified investment portfolios and have done relatively well in this volatile time. We are analyzing potential unexpected effects with our clients.”

FX Derivatives

The products at the center of the controversy are “conditional target redemption forwards”—complex derivatives that allow clients to exchange currencies at preferential rates under specific market conditions but can generate substantial losses if exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term rates move beyond predetermined thresholds.

Some affected clients, including wealthy retail customers, claim they were sold products inappropriate for their investment sophistication level. In one case reviewed, a client lost more than half their investment made in February on a dollar-Swiss franc derivative, according to documentation dated May 9.

The Swiss Association for the Protection of Investors reported that over 30 individuals have come forward regarding losses from UBS-marketed structured currency derivatives. The non-profit organization noted most complainants were wealthy private individuals with assets exceeding 1 million francs but lacking specialized knowledge about these complex financial instruments.

“Not Suitable for All Investors”

While the reported losses represent only a small fraction of UBS's $5.9 trillion in assets under management, the timing is particularly sensitive as the bank awaits government proposals regarding additional capital requirements following its Credit Suisse acquisition last year.

During an April earnings call, UBS Chief Financial Officer Todd Tuckner addressed market volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term, noting that “when there's volatility, there's going to be clients that generate gains from that volatility and clients who generate losses.”

Financial institutions face regulatory obligations to ensure investment products match client risk profiles and financial sophistication. The documentation for the derivatives in question included disclaimers stating they were “not suitable for all investors” and were “only suitable for experienced investors.”