Losses are already mounting as a result of the Swiss currency shock and casualties are being reported all over the world. FXCM Inc., the largest U.S. retail foreign-exchange brokerage which handled a record $1.4 trillion of trades by individuals last quarter, said clients now owe $225 million on their accounts after the Swiss National Bank’s decision to abandon the franc’s cap.
FXCM’s shares dropped 15 percent yesterday to $12.63, the lowest in almost two years, reducing its market capitalization to $595.6 million.
“Due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses,” FXCM said in a statement dated Jan. 15. That “generated negative equity balances owed to FXCM of approximately $225 million.”
FXCM had 230,579 retail customers on Dec. 31, trading $439 billion of currency in December, with an average of 595,126 retail client trades a day.
On the other side of the globe, New Zealand’s Global Brokers NZ Ltd. said the impact of the SNB move on its business is forcing it to shut down, probably the first victim of the Swiss bank’s new policy.
“I would be astonished if we did not see more casualties,” Nick Parsons, the London-based head of research for the U.K. and Europe at National Australia Bank Ltd., said by phone from Sydney. “This was a 180-degree about turn by the SNB. People feel hurt and betrayed.”