Spreadbetting customers should reassess the risks they are taking with highly leveraged currency bets, in the wake of Alpari’s collapse on the Swiss franc swings, rival firms said yesterday.
“Customers have to think about the risk disclosures, there is a risk associated with trading currencies. We try to educate the customer,” said Oanda’s Vatsa Narasimha.
“We offer 50-to-one leverage, which is the limit in the US.”
By contrast, Alpari offered as much as 500-to-one.
“In recent years we have had requests from potential clients that wanted to build up large euro-to-Swiss-franc positions on very low margins but we rejected this business as being too risky for the client and too risky for ourselves,” said Peter Cruddas, of CMC Markets.
“Regulators want financial markets that are sound, stable and resilient but there was little they could have done given the Swiss National Bank’s timing and conduct in making their announcement.
City veteran David Buik said the crash shows traders have short memories: “One could be forgiven for feeling that markets have failed to learn from the fall-out in 2008.”