Personal EURCHF losses

Leemus

Newbie
2 0
IG also say that they were unable to hedge their position in the 30 minutes after the SNB lifted the cap. Now, i checked their 'Insight' website 2 days previously after the SNB vice chairman said that the cap was central to their monetary policy. According to 'Insight' on that Tuesday, people with positions using IG in that currency pair were 97% long CHF. I would assume that IG would have had some sort of alert to this (97% is a very one-sided position), after all it IS THEIR BUSINESS. They only think about hedging 30 minutes AFTER the event. That, in my eyes, isn't good enough and certainly isn't looking after their clients. Thoughts please
 

highbury fx

Well-known member
338 114
IG also say that they were unable to hedge their position in the 30 minutes after the SNB lifted the cap. Now, i checked their 'Insight' website 2 days previously after the SNB vice chairman said that the cap was central to their monetary policy. According to 'Insight' on that Tuesday, people with positions using IG in that currency pair were 97% long CHF. I would assume that IG would have had some sort of alert to this (97% is a very one-sided position), after all it IS THEIR BUSINESS. They only think about hedging 30 minutes AFTER the event. That, in my eyes, isn't good enough and certainly isn't looking after their clients. Thoughts please

Hi Leemus

My thoughts are you don't really understand how a spreadbetting company manages their risk.

IG (or any other spreadbet firm that runs a B book) will have a total limit risk across all products and separate risk for each individual component. In the case of EUR/CHF they will have a risk limit for Euro and a risk limit for CHF. Only when those risk limits are exceeded will the S/B firm hedge the excess in the underlying market.

The risk that IG had in EUR/CHF at the moment the SNB changed policy was equal to their clients total exposure less IG's hedges. For example, the 97% of clients you mention were long CHF (they were Long EUR btw, they were Short the CHF) may have had a notional total position of €1bn. If IG's authorised internal risk limits were €100m, they would have €900m hedged in the market.

IG didn't therefore 'only think about hedging 30 minutes after the event' at all. They had in fact been hedging most of their risk continuously. Only once the SNB removed the cap and client stops were being triggered did IG have difficulty hedging that part of their exposure, but that wasn't your point. Your point was they didn't try and hedge any of the position until it was too late and that is incorrect.
 

Leemus

Newbie
2 0
Hi Leemus

My thoughts are you don't really understand how a spreadbetting company manages their risk.

IG (or any other spreadbet firm that runs a B book) will have a total limit risk across all products and separate risk for each individual component. In the case of EUR/CHF they will have a risk limit for Euro and a risk limit for CHF. Only when those risk limits are exceeded will the S/B firm hedge the excess in the underlying market.

The risk that IG had in EUR/CHF at the moment the SNB changed policy was equal to their clients total exposure less IG's hedges. For example, the 97% of clients you mention were long CHF (they were Long EUR btw, they were Short the CHF) may have had a notional total position of €1bn. If IG's authorised internal risk limits were €100m, they would have €900m hedged in the market.

IG didn't therefore 'only think about hedging 30 minutes after the event' at all. They had in fact been hedging most of their risk continuously. Only once the SNB removed the cap and client stops were being triggered did IG have difficulty hedging that part of their exposure, but that wasn't your point. Your point was they didn't try and hedge any of the position until it was too late and that is incorrect.

Wow! Thanks Highbury, yes that was my mistake saying 97% long CHF, when i meant EUR. You certainly seem to know your stuff...anyone would think that you actually work for IG. Cheers
 

highbury fx

Well-known member
338 114
Wow! Thanks Highbury, yes that was my mistake saying 97% long CHF, when i meant EUR. You certainly seem to know your stuff...anyone would think that you actually work for IG. Cheers

No worries.

Yes, anyone who has a habit of jumping to the wrong conclusion would think that I actually work for IG.
 
Take action against GFT platform CHF trading unfair treatment

Did anyone suffer losses on EURCHF as a result of the SNB floor pull?
If so, which spreadbet broker and what level were you out at?


Hi,

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