Surprise Huge Move In Swiss Franc From Switzerland Central Bank

Discussion in 'Interactive Trading' started by leverage, Jan 15, 2015.

  1. jack

    jack Administrator Staff Member

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    POW!

    Interactive Brokers gets hit for $120m

    http://www.ft.com/fastft/263202/interactive-brokers-clients-take-120m-loss-on-franc
     
  2. jack

    jack Administrator Staff Member

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    Wham!

    Alpari UK is now insolvent!

    http://uk.reuters.com/article/2015/01/16/uk-markets-forex-alpari-idUKKBN0KP10720150116

    FCA protection has most clients covered.
     
  3. jack

    jack Administrator Staff Member

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    Found this on reddit, and FXCM hasn't officially opened yet today on the NYSE:

    [​IMG]

    I don't think they're walking away from that $225m hit.
     
  4. rod178

    rod178 Well-Known Member

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    Nope, the State Animal, the "Black Kangaroo"
    Many visitors mistake then for Geese, especially from a distance.
     
  5. the golden gun

    the golden gun RINSE & REPEAT

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    did you take that picture?
     
  6. rod178

    rod178 Well-Known Member

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    Just this close up.

    [​IMG]
     
  7. jack

    jack Administrator Staff Member

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    I merged this and the other SNB floor pull thread.
     
  8. outthislife

    outthislife Well-Known Member

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    http://www.bloomberg.com/news/2015-01-16/fxcm-said-to-be-in-talks-with-jefferies-for-200-million-rescue.html

    FXCM Said in Talks With Jefferies for $200 Million Rescue
     
  9. jack

    jack Administrator Staff Member

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    Squawk just said $300m deal with Jefferies' parent company.

    This keeps them in business, limping along.
     
  10. outthislife

    outthislife Well-Known Member

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    http://www.cnbc.com/id/102343957

    Yay I can stay w/ the FXCM TradeStation.. I can't stand MT4.
     
  11. rod178

    rod178 Well-Known Member

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    Axitrader axes leverage on EURCHF

    Just in time
    http://leaprate.com/2014/11/axitrader-axes-leverage-on-eurchf/

    AxiTrader has amended the standard margin requirements for EURCHF positions to 50:1 from the previous level of 100:1
    axitraderhorn

    Clients of Australian FX company AxiTrader can wave goodbye to leverage when trading the euro against the Swiss franc (EURCHF).
    AxiTrader today announced that as a result of the firm responding to changing market conditions, the company’s Risk Department will be amending the standard margin requirements for EURCHF positions to 50:1 from the previous level of 100:1.
    The new requirement will be effective from 01 December, 2014 and will remain in place until further notice.
    As far as the effect this will have on the trading of these instruments is concerned, AxiTrader has confirmed that if a customer is trading EURCHF positions, the additional margin may require traders to increase their collateral with AxiTrader, or to reduce their EURCHF position.
    The company iterates that failure to meet the new, higher margin obligation will put traders in to margin call and may result in the automatic close out of certain positions.
    Whilst this represents a significant reduction in leverage over the previous level, it is in keeping with many companies globally and indeed is likely to not only be a prudent move for AxiTrader, but also one which should appease regulatory authorities globally, especially in the Far East, a market in which Australian firms have shown a vast degree of interest lately.
    As an example, the Japanese Financial Services Agency introduced a ruling two years ago that leverage on all instruments across all retail trading platforms should be no more than 1:25. This did not deter traders, on the contrary, 2013 heralded trading volumes of over a trillion dollars per month, for several summer months in succession as Japanese traders continued to dominate the global FX markets.
    AxiTrader’s range of services have evolved recently, with the company making a foray into the Prime Brokerage segment, as well as majoring on social trading technology.
    With regard to gaining an additional perspective on the decrement of leverage, the EUR/CHF chart below makes a clear depiction.
    It is clear that the previous time the EUR/CHF got close to the floor at 1.2000, that move was followed by a steep rise in the price, however currently the price is hovering around floor levels again.
    This presents profit opportunities for traders who open a long position, and AxiTrader emulates a move which certain other companies such as Dukascopy made in October, the first time the price of EUR/CHF got near the 1.2000 mark.
    At that time, the Swiss company revised the maximum leverage level from 1:20 to 1:10.
     
  12. rod178

    rod178 Well-Known Member

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    A Lesson From the Swiss: Leverage and Online FX Are Dangerous Mix

    not a good article, nevertheless still interesting in that calls for elimination of leverage are getting louder

    http://blogs.wsj.com/moneybeat/2015/01/16/a-lesson-from-the-swiss-leverage-and-online-fx-are-dangerous-mix/

    also
    http://blogs.wsj.com/moneybeat/2015/01/16/six-in-ten-retail-forex-traders-lose-money-each-quarter/?mod=blog_flyover
     
  13. Computater707

    Computater707 Well-Known Member

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    $34 Billion into Swiss Banks in December. Then a 30% Bonus in January. Better than a toaster or free checking

    http://www.cnbc.com/id/102343957

    However Adam Myers, European head of FX research at Credit Agricole, said that some market participants appeared to have been aware that the SNB's decision was coming before the official announcement.

    "It definitely looks like to us," he said on Friday. "There was a movement in the market well ahead of the headlines (from the SNB)."

    He also said there was a "huge flow" of Swiss francs -- around 34.2 billion -- into Switzerland during December, according to the SNB, which is around 10 times the monthly average.

    "You wonder why the Swiss had to break the peg – they were brought to bear by the enormous strain of money flowing into the country during December."
     
  14. rod178

    rod178 Well-Known Member

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    The "Tactical" Nuclear Option(s)!

    The "Tactical" Nuclear Option(s)!
    http://news.goldseek.com/GoldSeek/1421424300.php
    By Bill Holter

    " WOW! Two huge news stories within 24 hours. First, Russia decided to shut off the gas pipeline to southern Europe, next the Swiss dropped their 1.20 floor peg to the euro. The first story is absolutely huge but has been completely overshadowed by the Swiss. In my opinion, the Russian move is part of the "war" chess game, the move by the Swiss is your beginning to multiple resets leading into a complete economic and financial reset!

    Let me start with Russia. They had already tightened the gas spigot to southern Europe by some 60%. This is gas which travels through the Ukraine. As of yesterday, it has been reported the flow has completely stopped. Why now you ask? Well, several "timing" reasons come to mind. First and most obvious is "it's cold outside" as Europe is in the middle of winter. Playing the gas card now has maximum impact. Secondly and most importantly, Europe is in the process of deciding whether or not to go along with the more severe economic and financial sanctions concocted by Washington. As a side note, as if it was not very important on its own, France must decide whether or not they will deliver the 2nd Mistral warship contracted with Russia.

    Shutting the gas off at this moment is Vladimir Putin telling Europe, "you are either with us or against us, make your decision and make it NOW!". I had a very astute friend describe the situation as follows, "This move by Russia makes perfect economic sense, because Russia or anybody should NEVER reward bad behavior, and to acquiescence is always a reward. I guess that the Western government leaderships never got that memo". He added, "the second shoe to drop will be Russia requiring payment for oil in yuan". Also very astute but stops short of the ultimate "killer", Mr. Putin could simply require payment in gold. This would blow the doors off of the entire Western financial system as they have already divested 100 year's worth of gold reserves!

    The second tactical nuke to hit Europe was the Swiss National Bank breaking the floor peg of 1.20 to the euro. Within minutes, the euro dropped to parity and then some. The Swiss also lowered their "negative interest rates" to -.75% from -.25% in an effort NOT to attract capital. Apparently this did not work! You can look at what the Swiss did from several angles, each one of them very negative to future world events. First, whether you like it or not, this is a very big negative vote for the Eurozone itself. The Swiss may be looking at near future current events and trying to isolate themselves. They could be looking a Mario Drahgi announcing full on monetization next week, or, they might be looking at the Greek vote and likely (in my opinion) exit from the Eurozone. In any event, their action is no vote of confidence.

    Please remember, the SNB has a huge (greater than 50%) of their reserves in euros. This effectively "took a couple of toes off" as the majority of their reserves have just effectively been devalued. Their stock market opened down 15% as their foreign trade and tourism will now be damaged. The move to revalue higher will make imports much cheaper but devastate their export economy. It will actually bankrupt some exporters with skinny profit margins. Put bluntly, the Swiss can now look forward to a very steep recession if not an outright depression.

    The move by the SNB viewed from a macro standpoint is also an eye opener regarding central banking and central bankers. They had previously "promised" (as recently as this past Monday) this 1.20 peg versus the euro, they have now reneged. Many European and Swiss businessmen made plans and invested money into businesses which now are untenable. Many businesses will be flat put out of business and original capital lost. "Trust" has been broken by the central bank. The obvious question is "who is next"? We here in the U.S. have been "fed" (pun intended) a continuous diet of the Fed beginning to tighten, will they retain any respect at all when another round of QE (loosening) is announced? Though this is the first instance of a central bank shocking the world, it will not be the last. These "shocks" will serve only one purpose, they will illustrate that central banks no longer are in "control".

    --As a side note and this paragraph is being inserted during my editing, Christine Lagarde of the IMF was interviewed by CNBC yesterday and admitted the Swiss move was a surprise to them. She went on to talk about the importance of "coordination and communication" between central banks. So, I guess the SNB went totally "rogue" on their decision and have acted purely out of personal preservation? I am not saying this tongue in cheek, this is exactly what the Swiss have done! This is what I have talked about all along, when the "moment" came, it would be "every man for himself" ...this certainly qualifies.--

    Putting these two events together, the oil shutoff and monetary shock together, I view several very obvious conclusions. Russia is "courting" Europe and "helping them" decide to abandon the U.S. and to do business eastward. The Swiss I believe are trying to insulate themselves from a breakup of the Eurozone. Standing WAY back and viewing not only the forest but all of the "forests", this is the very public beginnings of a global reset. No matter what you want to think, the Swiss have just "reset" their entire system and currency versus the euro and thus the entire world! Yes I know, this is just one country. I am trying to tell you this may only be one country but it is the beginning reset for all countries, assets, economies and financial systems!

    Before finishing, it is also important to see the reaction in the gold market. Gold has exploded $30+ higher in reaction. Gold clearly sees the Swiss action as a monetary warning sign of what is to come. What is coming is a global reset brought on by a currency and credit crisis. Gold is money. Gold is the ULTIMATE money! The Swiss franc has been seen as a "safe haven" currency. They are now "taking" more interest than they were when they first went negative. The Swiss franc is also greatly supported...by a currency which was devalued by 15% (30% at one point) overnight ...which shrinks their reserve base by more than a whopping 10%! Will the world look to currencies like the Swissie or will it look to gold as a safe place to avoid the crisis and the looming reset(s)?

    I think this question can be answered with another set of questions. Can the Swiss franc actually "default"? Can an ounce of gold default? Do global currencies depend on economies which may (most likely are) be leveraged too far? Switching gears with these questions, how would the Chinese answer these questions? This may be the most important question of all because the old saying "he who has the gold ...makes the rules". We know for a fact the Chinese "have the gold". We highly suspect (via common sense evidence) that the U.S. and the West in general has offloaded much of their gold. Could China force a global reset into gold at much higher prices?

    Folks, this is truly it! The Swiss have fired the opening "re set" volley! The leverage employed all throughout the West will force "sales", and will force "purchases" of various markets, currencies, commodities, credits and "money". Close your eyes to this at your own peril, time is now very short to secure your chair in this global game of musical chairs. Before you do sit down, make sure you are protected. Owning Precious Metals is the only sure way. Follow the major trends on the global stage and give us a call at Miles Franklin to make your seat more comfortable.

    A global reset has begun! "
     
  15. rod178

    rod178 Well-Known Member

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    The CHF blood bath, explained
    http://blog.darwinex.com/chf-bloodbath-explained/

    January 17, 2015/7 Comments/in Darwinex /by Juan Colon
    48 hours into the CHF debacle, it’s always healthy to carry out some post-mortem analysis to learn the lessons of why it happened, and what we could have been done to weather it better.

    Since we’ve done it, why not share it?

    The macro-story: Black-Wednesday, redux
    What happened is crystal-clear with the benefit of hindsight (as it always is).

    The CHF is a currency safe-haven, albeit a rather illiquid one, since it’s only backed by a tiny and financially hypertrophic economy. Ever since the EUR crisis, everyone and their mother placed some of their safety net in CHF – so much so that the Swiss National Bank was forced to ¨intervene¨ to keep the level at 1.20 to the EUR.

    The intervention mechanism was: whoever bought CHF close to 1.20 sold to one counterparty, and one counterparty alone – the SNB. In broker parlance, the SNB became the daddy of all market makers by being the only player in the market with “unlimited” access to CHF close to the 1.20 EUR/CHF cliff. This filled the balance sheet of the SNB with foreign currency reserves… above all with a boatload of EUR, for EUR area is the Swiss’ primary commercial partner and the home currency of nervous europeans who by now trust neither their “unbreakable” currency, nor their tax-agency (the latter being food for another post).

    With the EUR crisis on its way back (it has never really left…), the EUR has gone on free-fall, and EUR reserves were drilling the daddy of all P&L hits in the SNB balance sheet. That was before Herr Jordan got Mario’s phone call kindly announcing QE. Herr Jordan’s press conference is (financial) history being written as we speak.

    Black Wednesday on September 16th, 1992, George Soros hit the headlines. Actually, he didn’t until after the dust had settled.

    On the January 15th Donnerstagsdebakel (made this up, but it’s fitting for Thursday is the day of Thor and Thunder, depending on the language you choose), someone else hit the Jackpot.

    We don’t know the name of the winner yet: journalists are still chasing around for a name and a photo to head their scoop… but if you want an outline of his likely background, read on.

    We (traders, brokers, broker-dealers, and dealers) went about our business, nonplussed.

    Traders saw juicy price-action dynamics at that level, and brokers readily offered (leveraged!) trading access to the CHF. Again with hindsight, everyone was dancing on a cliff… not wondering too much what would happen if (actually, when) Hoover Dam fell.

    So far, all pretty standard, really.

    The interesting (and sad) bit, and the one that has received the least early attention is that the Fall affected brokers (A-Book) and dealers (B-Book) in tragically different ways – just as you’d expect it, for brokers trade with customers and dealers trade against them.

    This effect IS news, because what went belly up on Thursday is the capillary over-the-counter (OTC) system of broker-dealers that makes currencies flow world-wide.

    a-book, aka involuntary (unprepared!) contingent market makers
    The moment the previous market maker (the SNB) went on strike, Hover Dam fell and sent the EUR on free-fall against the CHF – which called the next market makers to action: customers short the CHF and their collateral posted with their agency-only brokers and Prime Brokers (we’re pure A-Book).

    Once that was exhausted (the higher the leverage offered, the quicker), brokers’s and Prime Brokers’ stop-losses triggered, but there was no market, so the margin we had posted with our Prime Brokers was the market. We, a-book brokers became involuntary (and ill equipped) market makers of last resort, not against our retail customers, but our wholesale counterparties.

    Technically we ran no risk since actually it was our customers shorting the CHF who got smacked. In practice, FXCM (and others!) now know better: you can’t hire an army of lawyers to track thousands of micro-debts because each debt is smaller than 30 min of lawyer fees.

    So there you go.

    If you’re looking for victims, you’ll find more than your fair share in the lines of pure agency Brokers and Prime-Brokers who catalysed spot foreign exchange flows between macro (Tier 1 Banks and Central Banks)market makers and micro (Hedge-Funds, retail traders, Tier 2 institutions) price takers.

    b-book, unregulated retail bucket shops
    The retail spot forex trading arena contains close to 1000 unregulated, undercapitalised, over-levered retail dealers (= bucket shops) who make markets against FX punters.

    (How or why they are allowed to invest massive amounts into advertising to earn business in regulated markets escapes our understanding, but that’s for another blog post.)

    More to the point, how did they fare? Just fine, thank you.

    They kept the deposits of those short the CHF, as they always do – and they didn’t have any losses with wholesale counterparties to match (all they do is trade against customers, remember?).

    So how about the winners? You can bet that many of those outfits will keep the P&L of winning customers (there was no market, re-quotes, blah-blah), as they always do. That’s when operating an unregulated casino comes in particularly handy.

    So there you go.

    If you’re looking for more victims, go find would have been genius… who discovered a tad too late that trading with an unregulated bucket shop is a variation on the age old “heads I win, tails, you lose” coin toss.

    They could have been George Soros, but learnt the concept of counterparty risk instead.......
     
  16. foreigner

    foreigner Est. 12480 Hours and Counting

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    1. This was not a tradeable event - No retail trader would have made any money from the move.

    2. The Swiss including their national bank know the value of their Country and its currency - Thats why they unpegged it from the Euro. No damage has been done nor costs incurred that were not accounted for in the move.

    3. Anyone notice how Saxo MT4 stepped up their marketing last year? Mmm I wonder why?! "When Forex Magnates first reported about Saxo Bank raising EUR/CHF margin requirements in September 2014, 85.8% of the traders on Saxo Bank’s book were shorting the Swiss currency.

    4. Retail was short across the board "The picture has been similar across a number of other brokers – at the time 88.27% of OANDA’s and 98.9% of FxPro’s EUR/CHF traders were wrong-footed, and this number has only increased since September, according to Forex Magnates’ sources and to the regularly updated publicly available graphs from major brokerages."

    5. They'll never do away with leverage - How else are they going to screw us over before we learn about risk?

    6. This was a wealth transfer plain and simple - To those in the know from those who dont.

    7. Nothing has fundamentally changed - Nada.
     
  17. marzullo63

    marzullo63 [by user request]

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    Even if they hadn't that 0 balance protection... go out there to hunt the customers good luck ! :D
     
  18. marzullo63

    marzullo63 [by user request]

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    I live in Switzerland, but I am not Swiss >:D. This week end pretty much everyone is going over the border to spend some money... Shops here are more and more empty, even the cinemas, why pay 32 CHF when I can go in Italy and watch a movie for 8 Euros... BS!
    There is an incredible deflation, the petrol went from 1.82 CHF/l to 1.30 CHF/l in less than 6 months, thanks to oil and CHF compounded..., everything is lowering and the rebates are blinking in all the major malls.
     
  19. pipmart

    pipmart Well-Known Member

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    Email from my Oanda:

    Seems pretty stand up for them to send this out.
     
  20. Peterma

    Peterma Well-Known Member

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    Please be informed that due to today’s exceptional market movement in CHF crosses, we have been filling clients’ orders and positions in an extremely illiquid market.

    As such, we are now reviewing all executed fills and we will amend them to more accurate levels. This may result in a worse execution rate than the originally filled level.

    Please keep in mind that, therefore, the balance in your account(s) might change and your trading activity be affected.

    Should you have any questions regarding our market trading hours please contact 0800 138 4582.

    Kind Regards,

    ETX Capital
     

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