The decision pushed the Swiss franc higher, pulling other countries' currencies, such as the New Zealand dollar, to record highs against the euro.
The Swiss central bank had reportedly been intervening in forex markets by selling francs and buying euros to cap the currency at 1.2 francs per euro. The bank described that as unsustainable. "This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate."
New Zealand currency brokers Global Brokers NZ, which operates the Excel Markets currency trading platform, announced it could no longer meet its regulatory minimum capitalisation requirements of $1 million after the currency movement.
It said most of its clients with Swiss franc positions lost money on the franc yesterday and when client losses could not be covered, they were passed on to the brokerage.
All client accounts with a positive equity could be withdrawn but losses that could not be exited due to illiquidity would not be reimbursed.
In a statement on the Excel Markets website, director David Johnson said client funds were in segregated accounts.
But he said the interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker.
Johnson offered an apology to clients: "News of the impact of this event on companies and traders is just beginning to come to light. As directors and shareholders we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group. We ask that you place withdrawal requests for your account balance at your earliest convenience and allow for minor delays as our team begins to experience higher than usual service volumes."
| « Passive not the easy option | IFA working on pro-bono offering » |
Special Offers
No comments yet
Sign In to add your comment
© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved