The Forex broker Alpari UK from United Kingdom has become the latest victim of the monetary crisis caused by the central bank of Switzerland.
Alpari UK, which has its head office in Bishopsgate in London, said it had become insolvent due to the magnitude of the losses suffered by its customers following the announcement of the Swiss central bank that it would allow its currency float freely in the currency markets.
Alpari UK joins the number of companies that feel the impact of the strong movement in the currency markets on January 15. For example, financial spread betting firm London Capital said it had an exposure of 1.7 million euros because the stocks fell 14%, while other companies like City Index, issued reassuring statements to their customers.
Alpari blamed their problems on the recent market volatility. “The recent strong movement in the Swiss franc caused by the unexpected change in monetary policy of the Swiss National Bank, which decided to remove the cap of the Swiss franc against the euro has resulted in an exceptional volatility and extreme lack of liquidity,” said Alpari, who signed a three-year contract with West Ham football club in the English Premier League in 2013 worth 3 million pounds a year.
“This has caused that most customers have had losses that have exceeded their equity. When a customer can not cover this loss, it is transmitted to us. This has forced Alpari (UK) Limited to confirm the day 01/16/15, that it has entered into insolvency, “said the company. It also stated that the funds deposited by customers are kept separate in segregated accounts as required by the rules imposed by the FCA (Financial Conduct Authority).
Alpari analysts described the decision of the Swiss central bank to stop limiting the value of its currency to €1.20 as “idiot” in the immediate aftermath of Thursday’s movement, which took the market by surprise.
The Swiss currency soared by almost 40% against the euro and the dollar. The CMC broker also recorded losses, according to its chief executive, Peter Cruddas. However, at the same time he said the company remains strong.
“Like many of our competitors, CMC Markets has sustained some losses, however, the overall impact including possible bad debts has not materially affected the group” Cruddas said.
IG broker was one of the first companies in the sector to admit that it had potential losses of 30 million pounds and the next day City Index said he had not suffered any major impact.
“It has come to our attention that a number of brokers have announced that this event has caused severe financial pressure. Following this and queries from customers, we would like to take this opportunity to reassure our customers and the market that City Index has suffered no material impact as a result of the volatility of yesterday and our financial situation is not affected “said City Index.
However, the US Forex broker FXCM warned that customers were experiencing significant losses. This has generated “negative equity balances belonging to FXCM of approximately $225 million,” said the firm in New York. “As a result of these debit balances, the company may be falling in breach of certain regulatory capital requirements. We are actively discussing alternatives to return capital to the levels previous the events and discuss the matter with our regulators,”