Courtesy of Mish.
While researching material for an article on winners and loses in the record Swiss franc move, I came across this quote as reported by Bloomberg.
“Currencies don’t move that much. So if you had no leverage, nobody would trade.”
Who said that?
Drew Niv, FXCM’s chief executive officer. The story progresses …
FXCM Risk Controls
Bloomberg reports FXCM had 230,579 retail customers on Dec. 31. They traded $439 billion of currency in December, with an average of 595,126 trades a day.
The company warned investors in a regulatory filing last March that its risk controls were imperfect.
“Some of our methods for managing risk are discretionary by nature and are based on internally developed controls and observed historical market behavior,” the company said in the regulatory filing. “These methods may not adequately prevent losses, particularly as they relate to extreme market movements.”
And what happened?
FXCM Gets Rescue
The Wall Street Journal reports Surge of Swiss Franc Triggers Hundreds of Millions in Losses with brokerage firm FXCM getting a rescue.
Brokers around the world are crumbling in the wake of the Swiss National Bank’s shock decision to remove the cap on its currency….
