According to a company announcement made by FXCM Inc. (NYSE:FXCM), the company has decided to forgive the majority of negative client balances in the aftermath of the Swiss franc debacle which unfolded after the Swiss National Bank's unexpected retreat from the 1.20 EURCHF exchange rate floor.
The announcement states that 90% of clients' negative balances at FXCM will be waived. The company will be sending out notifications to all applicable clients in certain jurisdictions and will adjust the account balances in the next 24-48 hours.
"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 Drew Niv, CEO of FXCM Inc (NYSE:FXCM).
Speculation about the move has been growing in recent days as some European customers have been receiving notifications that their balances will be reset to zero.
The company has stated that, "The SNB announcement, extreme price movements and the resulting lack of Liquidity were exceptional and unprecedented events causing many market participants to incur trading losses. These events were unforeseen and beyond the control of FXCM."
The firm will be notifying "institutional, high net worth, and experienced traders who generally maintain higher account balances," requesting them to cover their negative balances, pointing to the force majeure clause in the terms and conditions which a client signs with FXCM.
According to the announcement, the latter group of clients of FXCM Inc (NYSE:FXCM) represents about 10% of all customers who ended up in negative territory, yet in terms of volumes, it represent about 60% of the total debit balances owed.
Forex Magnates reached out to FXCM, who declined any additional comments at this time.
