USDCHF fell 1867 pips in just 1 hour on Thursday when the Swiss National Bank announced that it was unpegging Swiss franc from euro. Three years back Swiss National Bank had pegged 1.20 Swiss franc to 1 euro. On Thursday it surprised the market with its announcement to undue that pegging. Many traders were trading without stop losses and watched in horror as their accounts went up in flames.
At least two brokerage firms say they have gone bust after suffering losses on the Swiss franc’s massive surge this week, one of the most acute moves seen by a major trading currency in decades. At one point on Thursday, the franc surged around 30 percent against the euro after the Swiss National Bank ditched an increasingly expensive policy to limit the export-sapping rise of the currency. Derek Halpenny, a currency strategist at Bank of Tokyo-Mitsubishi UFJ, described the currency move as “unprecedented.”
One of the brokerage that went belly up was Alpari UK. Those traders who had been trading without a stop losses suffered the most heavily loses.
Losses mounted from the Swiss currency shock as the largest U.S. retail foreign-exchange brokerage said client debts threatened its compliance with capital rules and a New Zealand-based dealer went out of business.
FXCM Inc., which handled a record $1.4 trillion of trades by individuals last quarter, said clients owe $225 million on their accounts after the Swiss National Bank’s decision to abandon the franc’s cap against the euro roiled markets worldwide. Global Brokers NZ Ltd. said losses from the franc’s surge are forcing it to shut down. IG Group Holdings Plc estimated an impact of as much as 30 million British pounds ($45.5 million) and Swissquote Group Holdings SA set aside 25 million francs ($28.4 million).