About two weeks ago, Switzerland surprised the markets by removing its exchange rate floor of 1.20 on the EURCHF. As a result, the Swiss Franc’s (CHF) value instantly shot up by as much as 39%, sending the EURCHF pair over a 1000 pips straight down.
As a result, FXCM, the largest U.S. retail foreign-exchange broker, lost more than $200 million. A few days later, a $300 million bailout from Leucadia National Corp., the owner of investment bank Jefferies Group LLC, saved FXCM from violating capital requirements.
Now, FXCM says it will seek repayment from institutional and high-net-worth customers who lost more money than they had in their accounts. Those 10% of their clients are responsible for about 60 percent of the brokerage’s losses, New York-based FXCM said Wednesday in a statement. Traders who made smaller bets will have their losses forgiven.
“FXCM worked diligently to reach this decision and we are extremely appreciative of our clients for their patience and loyalty as we worked through this,” said FXCM CEO Drew Niv in a statement.
This is good news for the other 90% of their clients, and perhaps this decision has saved you. But even if the event and FXCM’s decision didn’t affect you personally, it would still be smart to consider working with a firm that covers their own trades and is large enough to handle a situation like this that goes in the favor of the customer.
In my last article, I recommended that you consider Institutional Liquidity (ILQ). They are registered in Australia, so they are in a great regulatory jurisdiction and a very safe option. As their name implies, they typically only deal with Institutional clients. Usually, you can’t go directly to them and get an account unless you are an institutional client.
However, Guardian FX currently has an arrangement that allows you to get an account with them averaging 1.5 pips spreads, and it comes with a 75% margin bonus on up to $250,000.
That extra margin bonus is HUGE, because it gives you the profit-generation capability that having an extra 75% in your account would. And it comes for free on all new deposits (up to $250,000).
To open an account with ILQ you must have an institutional introduction. Clicking this link will allow you to open an account and receive the 75% margin bonus through Guardian Trust FX Click Here to register. Your account will be with ILQ, but Guardian will be the institutional party.