UPDATE 1-Questions raised over Swiss franc retail trades

Mon Jan 26, 2015 2:25pm EST
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(Adds IG clients, IG spokesman, background)

By Patrick Graham and Jemima Kelly

LONDON Jan 26 (Reuters) - Doubts grew on Monday about the validity of trades in the turmoil that followed this month's removal of the cap on the Swiss franc, with administrators of Alpari UK saying they were taking another look at the retail broker's trades.

Clients of fellow broker IG Group, meanwhile, have told Reuters they are considering ways to challenge losses made during a financially crippling few minutes immediately after the freeing up of Swiss franc rates on Jan. 15.

Moves of up to 40 percent in the franc's value meant that the scale of losses depended heavily on where on the way down investors managed to complete automatic sell orders that should have capped losses at minimal amounts.

Brokers struggled to execute at the ordered rates and most have chosen to cancel resulting negative balances for retail clients, with Denmark's Saxobank standing out as having chosen to revisit the rates at which client orders were executed and seek full settlement of money owed.

Alpari administrator KPMG said on its website, in a letter to the broker's clients and creditors, that it was revisiting trades made after the removal of the cap and might alter the amounts owed by clients as a result. KPMG said there had been "certain inconsistencies" in the pricing of trades after the franc started to move.

A spokesman for IG Group said it was seeking payment of negative balances as it always did, "as promptly as possible" from a group of 327 clients who had negative balances worth a little more than 17 million pounds ($25.6 million).

Reuters spoke to individual clients of IG, some of whom said they had already taken up the matter with Britain's Financial Conduct Authority and the financial ombudsman.   Continued...