January 26, 2015 / 7:28 PM / in 3 years

UPDATE 1-Questions raised over Swiss franc retail trades

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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.

IG said it had no indication of any pending complaints or investigations through the FCA.

“We are happy to debate any particular case with the FCA and with the client in question,” the IG spokesman said, underlining that the company itself had written off 12 million pounds in trades for clients at rates it had not eventually been able to secure.

“We are honouring every trade that was confirmed after the franc move,” he added.

The FCA said it would not comment on individual firms and declined to discuss the overall regulation of a sector which has seen a handful of firms fail or reach out for emergency funding because of client losses. ($1 = 0.6632 pounds) (Editing by David Goodman)

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