FXCM Reports $225 Million Hit; Fears for Retail Sector After SNB Move – Profit & Loss

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FXCM Reports $225 Million Hit; Fears for Retail Sector After SNB Move – Profit & Loss (subscription) The unprecedented move in CHF that followed the Swiss National Bank’s decision to abandon the euro peg has raised fears of a series of bankruptcies in the hedge fund and small institutional community, as well as pressured several retail brokers. FXCM has stated that its clients suffered “heavy losses” in the move and that the firm was owed $225 million and “could be” in breach of some regulatory capital requirements.

Alpari (UK) Enters Insolvency – Profit & Loss (subscription)
Alpari (UK) says it has entered insolvency due to client losses on the Swiss franc move yesterday.

SNB Move Fuels Speculation Danes May Be Next as Krone Gains – Bloomberg
The decision by the Swiss National Bank to abandon its euro cap is fueling speculation the Danish central bank may come under pressure to follow suit, according to Nordea Bank.

SNB’s Surprising Move Sends Shockwaves Through Markets – Profit & Loss (subscription)
The Swiss National Bank sent currency markets into a panic on Thursday when it took a necessary – if sudden – decision to scrap its three-year old EUR/CHF floor at 1.2000. Following the removal of the floor, EUR/CHF dropped sharply to an official low of 0.8500, although dealers report trades down the 0.8000 level.

Franc Fallout Boosts Dollar on Growing Demand for Haven – Bloomberg
The dollar traded 0.6% from an 11-year high against the euro after the Swiss National Bank roiled financial markets by unexpectedly scrapping the franc’s cap, spurring demand for safer investments.

Swiss Bankers Are Accelerating the Euro’s Slide – Bloomberg
The euro is shaping up as the biggest casualty of Switzerland’s decision to scrap its currency cap. While setting a record low versus the franc, the euro also plunged 3.5% against a basket of 10 developed-nation peers, the most since its 1999 debut.

Currency Markets Brace Themselves for Week of Turbulence – FX Week (subscription)
Currency traders are bracing themselves for turbulent market moves ahead of the European Central Bank’s first rate-setting meeting of the year and elections in Greece, both scheduled to take place next week, while the fallout from the Swiss National Bank’s decision to remove its EUR/CHF currency floor wreaked havoc in markets.

FXPA News: Join by Feb 1 to Qualify for Time-Limited Membership Category
The special founding member category of the Foreign Exchange Professionals Association (FXPA) will close on February 1. Join today to be part of the first wave of founding members that enjoy the distinct benefits that this class offers. FXPA recently crossed the critical threshold of 15 members, triggering elections for the first permanent Board of Directors and Officers. FXPA’s Board will include 50% representation by Founding Members that join prior to the February 1 deadline.

 

 

Regulatory News

ESMA to Cooperate With The Hong Kong SFC on CCPs
The European Securities and Markets Authority (ESMA) and the Hong Kong Securities and Futures Commission (SFC) have concluded a Memorandum of Understanding to establish cooperation arrangements regarding central counterparties that are established in Honk Kong and have applied for recognition under EMIR.

Dealers Waiting for Answers in CFTC Cross-Border Conundrum – Risk.net (subscription) 
Non-US dealers are unsure how much involvement their US staff can have in trades executed overseas. Plans to relocate salespeople were drawn up some time ago, but shelved, and last year’s extension of a no-action period means the confusion continues

Why Draghi Will Watch Greece As He Launches Eurozone QE – Financial Times (subscription)
The ECB would be crazy if it had not considered the wisdom of launching a massive government bond-buying programme to avert a dangerous eurozone-wide deflationary slump just three days before a Greek poll that could see the anti-reform Syriza party taking power — not least given German sensitivities towards riding to Greece’s rescue.

ECB’s Coeure Says QE Must Be Big to be Efficient – Reuters
Any programme of quantitative easing must be big to be efficient, European Central Bank Executive Board member Benoit Coeure said on Friday in a newspaper interview. “For it to be efficient, it has to be big,” Coeure told the Irish Times newspaper.

SEC Adopts Rules Establishing Regime for Swap Data Warehouses – Reuters
US securities regulators took another step toward shedding more light on the over-the-counter derivatives market Wednesday, adopting a raft of measures to give them a direct window into the opaque market.

House Passes Dodd-Frank Reforms – Squire Patton Boggs
The House passed an 11-bill package with a 271-154 vote. The package, which amends various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), had failed last week to reach the two-thirds majority vote that was necessary to pass under suspension of the rules.

 

 

Market Savvy  

Franc Retreat to Euro Parity Seen Short-Lived by Top Forecaster
Bloomberg
The gains that pushed the franc to the strongest on record against the euro may be far from over as markets reel from the Swiss National Bank’s decision to scrap its currency cap, according to the pair’s top forecaster. Switzerland’s currency has weakened about 16% since surging through parity to a record against the euro yesterday. That decline probably won’t last with the European Central Bank expected to announce a “significant” sovereign bond-buying program next week.

 

 

Press Releases

CME Group and GFI Group Announce Revised Offer for GFI Group Stockholders to Receive $5.60 per GFI Group Share
CME Group and GFI Group have revised their definitive agreements to increase the consideration payable to GFI Group stockholders to $5.60 per share from $5.25 per share, payable in a mix of shares of CME Group Class A common stock and cash.

BGC Announces Contingent Increase of All-Cash Tender Offer To Acquire GFI Group to $5.85 Per Share and Immediate Non-Contingent Increase to $5.75 Per Share
BGC Partners has announced that it has delivered an executed agreement to GFI Group that, if countersigned by GFI, provides that BGC would increase its fully financed, all-cash tender offer to acquire all of the outstanding shares of GFI to $5.85 per share.

 

 

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