LONDON Britain's Financial Ombudsman has ruled against trading firm CMC Markets in an initial opinion on a complaint over a client's losses after the removal of Switzerland's cap on the franc exchange rate in January.
A letter dated Oct. 20 sent by the Ombudsman to CMC and seen by Reuters said CMC's systems initially confirmed as executed client's Swiss franc trades before adjusting prices to lower levels later that day.
"It therefore remains my view that CMC has not demonstrated that the price of (the) trades were wrong and that it was wrong for it to have later changed them," the Ombudsman said in the letter. It said the company should return the value of the adjustments to the client concerned.
CMC, which said in January it had sustained some losses from the franc trades, said it would not comment on ongoing proceedings.
The letter said the company had until Nov. 3 to respond to the opinion. The Ombudsman assesses cases individually and has a 150,000 pounds ceiling on how much it can award.
The repricing of Swiss franc trades is at the heart of complaints by groups of clients of CMC and Saxo Bank, two of the largest online platforms amateur traders use to make leveraged bets on stocks, currencies and other financial markets.
Saxo said earlier this year it was owed about $100 million by clients who had leveraged bets on the franc to weaken against the euro when Switzerland removed the cap, leading to gains of up to 40 percent in the franc's value in a few short minutes.
(Editing by David Clarke)