FXCM set to bail small traders hit by the franc

Tim Wallace
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SMALL-TIME spreadbetters who were crushed by the Swiss francs wild swings two weeks ago will be bailed out, forex website FXCM said yesterday.

The platform itself nearly went bust as the unexpected 30 per cent jump in the franc against the euro meant some customers ran up huge deficits, far in excess of the funds in their accounts. But after a $300m (£198m) rescue package from its parent group Leucadia the firm was stabilised, and is now in a position to offer aid to retail customers.

By contrast, forex firm Alpari was forced to enter administration and is taking bids from more than 50 potential buyers of part or all of the firm.

Bets on the franc had been seen as an unusually low-risk strategy because the Swiss National Bank had capped the currency at €1.20. But when it unexpectedly withdrew the cap, markets were shocked and risk-averse clients ended up losing out.

FXCM is offering to write off the negative balances of 90 per cent of those customers whose accounts ran up a negative balance in the volatility. The balances are expected to be adjusted to reflect the announcement today or tomorrow.

FXCM’s shares rose 0.4 per cent in New York yesterday.