Luis Sanchez CEO of BMFN
Luis Sanchez CEO of BMFN

The SNB debacle – testing the metal of retail brokerage business models

First Published: e-Forex Magazine 60 / Viewpoint / April 2015

Why did some brokers fare better than others during the SNB event and how much of a test of their business models was it? It is a very good question and there are just two categories of brokers that weathered the SNB event better than others. There were many discussions in the media and everyone agreed that loosely regulated market makers, non FCA regulated brokers, whose CHF positions were the right way in the market and were not STP’d or covered benefited the most. As their clients suffered astronomical loses, given the leveraged nature of the product, they captured all of the cash equity and later on wiped out negative equity bringing accounts back to zero. The other group of brokers that did well during the SNB event is the one that either did not have any CHF related positions or suffered minor loses being either on the wrong side of the market or had position covered for clients whose equity could withstand this move and only slightly ended up in a negative territory. This event definitely...continued

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