LONDON (Reuters) - Retail currency broker Alpari filed for insolvency on Friday after a majority of its customers sustained losses after the Swiss National Bank’s decision on Thursday abandon the three-year old cap against the euro.
“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.”
The SNB stunned markets by scrapping its three-year-old pledge to cap the value of the franc at 1.20 per euro. That sent the franc soaring over 40 percent against the euro at one point. EURCHF=R
Another player in the retail space, London-based interdealer broker IG Group, said on Thursday many clients were able to close out their Swiss franc positions with IG more swiftly than the broker itself managed to close out its hedged positions on the currency in the forex markets. It forecast it would take a hit of around 30 million pounds.
Reporting by Anirban Nag and Alasdair Pal, editing by Nigel Stephenson