The shock announcement from the Swiss National Bank hit the CHF and many forex and spread betting brokers are sitting on heavy losses.
IG estimate their losses to be around £30m, London Capital Group (Capital Spreads) estimate a loss of around £1.7m. Gain Capital (Forex.com) who recently acquired City Index say they made a profit and Saxo is saying they may alter client fills.
Alpari released two statements regarding insolvency, but the problem with brokers is that as soon as customers, counterparties and the market lose confidence there is run on client accounts. Money is withdrawn and business dries up, and then as with MF Global, Lehman and Bear Sterns the brokerage, no matter whether or not it could have been rescued will fold. The Money Noose: Jon Corzine and the Collapse of MF Global
First Alpari insolvency statement
The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity,” Alpari said in a statement.
This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm that it has entered into insolvency.
Second Alpari insolvency statement
The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. Retail client funds continue to be segregated in accordance with FCA rules. For the avoidance of any doubt and notwithstanding previous announcements by the company, Alpari (UK) Limited has not entered a formal insolvency process. The board of directors are urgently considering all options including a sale and are liaising closely with the FCA. We hope to make a further announcement shortly.
Of the brokers left Iron FX, claim they are not affected, ETX also state they are fine.
Here is a list of three UK based and regulated spread betting, CFD and FX brokers that clients can move their account and trading to.
ETX Capital are the second biggest spread betting company in the UK. They offer a diverse product range, not just focussing on FX. They are UK based and regulated, and have a good sign up bonus.
If you open an account and deposit funds quickly you can get a welcome bonus of up to £6,000. You do of course have to put a certain amount of trades through before you can claim the bonus funds. Find out more…
IG have one of the biggest balance sheets in the UK. They are currently listed on the London Stock Exchange. The IG Group (IGG) share price took a bit of a hit on the back of the news, but they are still capitalised at £2.6b.
More importantly they are a diverse business. So a big hit on a specific asset class can be covered by business from other areas. They have recently launched a physical stockbroking service, have a good institutional base, are well risk managed and as they are publicly listed they are subject to regular financial reporting.
Investors Intelligence Spread Betting is provided by London Capital Group (one of the largest spread betting white label providers). LCG are also listed on the London Stock Exchange so are subject to the same reporting and regulatory requirements as IG. They offer a very diverse product range, not just FX and heavy focus on equities.
Where Investors Intelligence add value is by providing access to their research, analysis, data and trading signals. The research is derived from their institutional advisory business and model portfolios, trend and reversions reports are produced daily in UK, EUR, US equities, FX, commodities, index and fixed income markets.
The FX section provides directional indicators for most major and minor FX pairs. These indicators are based on P&F charting as well as around forty established technical indicators. The daily FX analysis looks at these signals and the analysts produce research based on likely trading opportunities.