Pat494
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I really don't understand your sympathy for IG. Surely they make money on commission, not trading for themselves ? Why should they care if the market spikes and takes out a lot of stops.
highbury fx
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IG make their money in 4 ways:
They run a risk book that will internalise trades from B book clients
They will capture both sides of the spread from clients trading on the same pair in different directions
They make money from the overnight financing they charge
They make slight differences in spread (commissions) from A book clients who are hedged in the market
This is the model that all 'Dealing Desk' CFD and Spreadbet firms use and they will all generally make money from all 4 revenue streams.
Every so often they'll get caught with their pants down and this is one of those moments. Everyone (including the brokers) was short the CHF and why wouldn't you be if the SNB has support at 1.2000, its your guaranteed stop. Or it was until this morning.....
timsk
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This isn't directly relevant to IG, but it's another aspect of the same issue. I wasn't affected either way, but I am an ETX customer - hence the e-mail just in . . .
"Dear Tim,
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"
Call me an old cynic but, reading between the lines, I think they're saying that had I been short throughout, ETX would be clawing back my profits. The big question in these circumstances is - had I been long - would they be so willing to compensate me for my losses? Or have I got that completely wrong?!
Tim.
"Dear Tim,
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"
Call me an old cynic but, reading between the lines, I think they're saying that had I been short throughout, ETX would be clawing back my profits. The big question in these circumstances is - had I been long - would they be so willing to compensate me for my losses? Or have I got that completely wrong?!
Tim.
donaldduke
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Call me an old cynic but, reading between the lines, I think they're saying that had I been short throughout, ETX would be clawing back my profits. The big question in these circumstances is - had I been long - would they be so willing to compensate me for my losses? Or have I got that completely wrong?!
Tim.
If you had been short throughout (before the announcement and still short) you would be ok.
They are saying they going to butt*uck everyone who got a fill in the minutes after the news.
They will widen the spread in hindsight. To 100, 200 or 500, or 1000 whatever pips they choose.
This way they can screw both the long and short customers who got filled in that time.
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neil
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This isn't directly relevant to IG, but it's another aspect of the same issue. I wasn't affected either way, but I am an ETX customer - hence the e-mail just in . . .
"Dear Tim,
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"
Call me an old cynic but, reading between the lines, I think they're saying that had I been short throughout, ETX would be clawing back my profits. The big question in these circumstances is - had I been long - would they be so willing to compensate me for my losses? Or have I got that completely wrong?!
Tim.
Their attitude is akin to those of the Bankers :When they screw up they screw you (the public).
counter_violent
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The difficulty for IG or any other outfit for that matter is simple to understand. They will be relying on their customers who went negative balance to stump up the wonga owed, and there is no question that these customers do owe IG this money. The only customers who will be spared any clawback will be the ones using guaranteed stops.
This is all part of trading folks and you cant go around blaming anyone else for your actions.
This is all part of trading folks and you cant go around blaming anyone else for your actions.
counter_violent
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So it's now clear that the SNB's actions are having major repercussions the world over. Don't think they will be winning a popularity contest anytime soon !
http://www.trade2win.com/boards/for...-owed-225-million-customers-who-lost-chf.html
http://www.trade2win.com/boards/for...-owed-225-million-customers-who-lost-chf.html
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tar
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Early on January 15, 2015, the Swiss National Bank (SNB) sent global financial markets into turmoil with a surprise move to eliminate its three-year-old cap on the franc (CHF).
In the wake of this unprecedented market event, OANDA demonstrated its ongoing commitment to doing right by its clients. Despite suffering losses and vanishing liquidity in the institutional hedging market, OANDA remained true to its 14-year legacy of transparency, integrity and fairness to our clients. OANDA did not re-quote or amend any CHF cross client trades. We even took the further step of forgiving all negative client balances that were caused when clients could not close out their positions fast enough (where permitted by regulations).
As a very well capitalized broker, we are proud to report that it is business as usual at OANDA: client trading, deposits and withdrawals are processing normally.
OANDA is proud of its strong reputation for fairness and integrity. We thank our customers for their continued loyalty and welcome new traders who want to experience outstanding service and execution.
In the wake of this unprecedented market event, OANDA demonstrated its ongoing commitment to doing right by its clients. Despite suffering losses and vanishing liquidity in the institutional hedging market, OANDA remained true to its 14-year legacy of transparency, integrity and fairness to our clients. OANDA did not re-quote or amend any CHF cross client trades. We even took the further step of forgiving all negative client balances that were caused when clients could not close out their positions fast enough (where permitted by regulations).
As a very well capitalized broker, we are proud to report that it is business as usual at OANDA: client trading, deposits and withdrawals are processing normally.
OANDA is proud of its strong reputation for fairness and integrity. We thank our customers for their continued loyalty and welcome new traders who want to experience outstanding service and execution.
itspossible
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Very good point.priase the lord for demos
neil
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donaldduke
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Guaranteed stops are only as good the solvency of the bookie.
If IG losses had been big enough and they declared insolvency then guaranteed stops could be reneged on and your account wiped out.
Scary thought and something to keep in mind before overleveraging in future.
If IG losses had been big enough and they declared insolvency then guaranteed stops could be reneged on and your account wiped out.
Scary thought and something to keep in mind before overleveraging in future.
Have any of the others been affected like City Index, CMC group or Capital Spreads? The biggest hit seems to be FXCM who were hit to tune of $225 million in the US.
http://http://www.reuters.com/article/2015/01/16/us-swiss-snb-fxcm-idUSKBN0KP1MY20150116
http://http://www.reuters.com/article/2015/01/16/us-swiss-snb-fxcm-idUSKBN0KP1MY20150116
timsk
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E-mail just in from ETX . . .
"Dear Tim,
Yesterday was a tumultuous day in the markets, largely due to the extreme movement in the price of the Swiss Franc, but we would like to assure our clients that our financial position is unaffected by yesterday’s market movements.
ETX Capital is confident that its systems, controls and policies properly manage the firm’s position and credit risk.
Our platforms continue to operate as usual today and we have every expectation that the firm will continue to make significant headway in 2015.
Kind Regards,
ETX Capital"
The last sentence sounds to me like they took a hit and they're trying to put a positive spin on things. I suppose the worry for all these brokers is that as the news of Alpari and FXCM spreads (there's a pun in there somewhere), us lot will panic and there will re a rush to withdraw funds a la the infamous run on Northern Rock in 2007.
Form an orderly queue everyone.
"Dear Tim,
Yesterday was a tumultuous day in the markets, largely due to the extreme movement in the price of the Swiss Franc, but we would like to assure our clients that our financial position is unaffected by yesterday’s market movements.
ETX Capital is confident that its systems, controls and policies properly manage the firm’s position and credit risk.
Our platforms continue to operate as usual today and we have every expectation that the firm will continue to make significant headway in 2015.
Kind Regards,
ETX Capital"
The last sentence sounds to me like they took a hit and they're trying to put a positive spin on things. I suppose the worry for all these brokers is that as the news of Alpari and FXCM spreads (there's a pun in there somewhere), us lot will panic and there will re a rush to withdraw funds a la the infamous run on Northern Rock in 2007.
Form an orderly queue everyone.
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Agreed, but I would still imagine the average client is more likely to blow up than the average broker.
What has really saved a lot of companies, who offer guaranteed stops is actually quite oxymoronic. The use of guaranteed stops in the Euro Swiss trades were very heavily under-utilised in comparison to other currency pairs. This was ironically due to the currency pegging! Which gave traders a false sense of security (and an ATR in single digits.). If clients had used more guaranteed stops then the brokers would have been in even hotter water.
WallStreetHero
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I got this email from GFT, seems like they did ok.