While we’ve been grabbing the news individually, our friends at Forex Magnates have compiled a list of the brokers who are forgiving negative balances over the SNB (Swiss National Bombshell) move. It’s worth a look just to make sure if you’re broker is on it they stick to their promise but there are a lot of names — including some notable ones — who aren’t on the list.

I’d like to give Forex Magnates a big thumbs up and thank you for doing what they do best in bringing us the broker news, particularly through this issue.

The companies not being so generous or undecided so far are;

  • ETX – reported by Chef in the comments
  • FXCM – still no concrete news
  • Alpari – Administrators note balance will be chased
  • CMC Markets Australia – Note that fills and balances will stand but it’s unclear if they will be chasing after negative balances.
  • Saxo bank – Sticking with revised fills as reported by The Firstadopter and is going after negative balances. “I believe it is the same for everyone in the industry when a rare event like this happens,” Steen Blaafalk, Saxo CFO told Finans.dk. “People lose money and cannot pay what they owe us. We’re trying to reach an agreement with them, but it is sometimes hard to pluck hair out of a bald man’s head.” Saxo expects to spend the “next couple of weeks” making arrangements “with each individual client,” Blaafalk said.
  • IG – No confirmation on negative balances
  • Gain Capital are on the forgiving list but Leap Rate report (20/01) that emails have been sent out saying that negative balances will called in. It is based on what looks like one email conversation between Gain and a customer

Update: Gain Capital says it will forgive negative client balances

Update 2: More talk on FXCM here after another press release

Update 3:

CMC Markets Aus

Important information about your Account

Actions taken by the Swiss National Bank on 15 January 2015 in removing the euro “peg”, alongside the benchmark interest rate cut, created severe dislocation in the underlying foreign exchange market between [09:30 and 10:02 GMT][10:30 and 11:02 CET]. This resulted in little or no liquidity in the affected Swiss currency pairs, with several liquidity providers upon whom we place reliance to generate the Prices on our Platform ceasing to provide any prices during this time. These events gave rise to Circumstances Outside Our Control which impaired the ability of our Platform to quote correct Prices, resulting in Orders continuing to be accepted at incorrect Prices for the affected Swiss currency pairs. Given the circumstances we determined it fair and reasonable to take a Reserved Action by varying the Prices at which the affected trades were accepted on our Platform to reflect the correct Prices in accordance with the terms of the Product Disclosure Statement, including but not limited to sections 11.5 (“Reserved Actions) and 11.7 (“Circumstances Outside Our Control”). This variation in Price was applied to all affected Accounts as a cash adjustment which can be viewed in your Account history.

What happened to pricing on CMC Markets’ trading platforms?

The prices quoted by those of our liquidity providers that were active during the period noted above became sporadic and in some cases extremely wide. To note, prices quoted by foreign exchange liquidity providers (unlike those for listed products) are only indicative and subject to rejection/re-quotes, therefore even when prices are being quoted they are not necessarily firm tradable prices reflective of the true prices (and therefore liquidity) available in the underlying foreign exchange market. Our Platform published incorrect Prices by failing to represent the events in the underlying financial market in which there was no liquidity.

What we did

We established the first available and tradable price (reflective of the underlying market) once the unprecedented market conditions ‘normalised’. At 10:02:54GMT three of our five banks began to publish more stable, reliable quotes which we used to calculate the adjustments referred to above.

Clients that had a Limit Order(s) trigger would have also received a cash adjustment at the first price available at 10:02:54 GMT

The first available sell price applicable to your x EURCHF was 1.00684 and accordingly a trade adjustment of AU$ -y has been made to your Account which reflects the difference between the incorrect price at which our platform initially executed the trade and the correct price of 1.00684.

In addition, any clients that were opening and closing the same position between 9.30 am and 10:02 GMT would have received a full spread rebate on either the opening or closing value that would have been generated at the time. For example:

  • if you bought and sold 10 you would have received a full spread rebate on 10
  • If you bought 20 and sold 5 you would have received a full spread rebate on 5.

These cash adjustments were made to impacted client accounts at 21:32GMT on 15th January 2015.

Finally, further cash adjustments were made to client accounts at 17:48 GMT on 18th January 2015 which hadn’t been previously factored in to reflect:

  • The correct currency conversion rate when translating any cash adjustments to the account currency; and
  • Conversion of any realised profits and losses to the account currency between 9.30 am and 10:02:54 GMT as the currency rates during this time frame were also incorrect
  • No clients would have suffered any further account deficits based on this recalculation as CMC Markets has decided to waive any further amounts due from the second adjustment
  • Any clients that received a benefit from the second adjustment will see a positive cash adjustment

If you have any further questions please contact our client management team

Capitalised terms used above have the meaning given to them in the Product Disclosure Document, which is available (together with associated documentation) on the CMC Markets’ website.

Kind Regards,

The Client Management team

Tel: 1300 303 888 or +61 (0)2 8221 2180
Fax: +61 (0)2 8915 9484
Email: clientmanagement@cmcmarkets.com.au

In the case of Alpari and the failure to sell or find finance for the business, which looks to be a tough sell anyway given the earlier comments from one of the groups main shareholders, it’s highly unlikely the administrators will be taking the route of forgiving negative balances as it looks like the company will fail and they will only be interested in recouping the losses. That only leaves the argument of whether they filled positions at the best prices available and their internal procedures acted within the regulations. Even so that is only an argument to possibly reduce the balance owed and not one to try and worm out of the debt altogether. Sorry if that sounds harsh but that’s the reality of the boat we’re in at the moment.