Monthly Archives: January 2015

#Francogeddon: Oanda Stands With Customers in the Wake of the SNB Shock

Various forex brokers reacted differently to the Swiss National Bank’s announcement that it had removed a 3 -year old cap against the Euro. The announcement, which sent the markets into a fray and was dupped #Francogeddon on the social media, caused incredible volatility and extreme ‘illiquidity’ in the markets.

Some brokers, such as the UK arm of Alpari, announced that they were folding operations due to the massive losses their customers incurred.  In many cases, the losses exceeded the investment/equity of the customers, forcing the forex brokerage firms to carry most of the losses.

Global Brokers NZ, another forex brokerage firm who folded operations in the wake of Francogeddon, said that many of its customers suffered loses that were more than their accounts’ equity, forcing the brokerage firm to bear the blunt of the losses.

The two forex brokerage firms have ascertained clients’ whose accounts were not affected by the Swiss Franc that they will get all their money back.

Amidst the Francogeddon Fray, a Glimmer of Hope

Other forex brokers are still trying to analyze the effect the Swiss Bank’s announcement had on their balance sheets, and there is a likelihood we will be hearing news in the tune of UK’s Alpari in the course of next week.

While the removal of the Franc-Euro cap was overwhelming to many forex brokers, some have been able to handle the announcement quite amazingly. A case in example is Oanda Brokerage Firm, which announced that they didn’t issue requotes on the CHF and that they had cleared all negative balances that customers who were on the wrong side of the trade had incurred.

Oanda’s announcement, which was carried in an email dispatch to clients, however, failed to verify whether traders who had bought CHF crosses would be paid.

“In the wake of this unprecedented market event, OANDA demonstrated its ongoing commitment to doing right by its clients. Despite suffering losses and vanishing liquidity in the institutional hedging market, OANDA remained true to its 14-year legacy of transparency, integrity and fairness to our clients. OANDA did not re-quote or amend any CHF cross client trades. We even took the further step of forgiving all negative client balances that were caused when clients could not close out their positions fast enough (where permitted by regulations),” the email read in part.

IronFx and HotFx also issued statements to the same effect.

A statement by IronFx read:

Iron Global Limited was not affected by these events due to our strong risk management systems and procedures and we continue complying well with our capital regulatory requirements under all regulatory bodies we have licenses. We would therefore like to inform our clients that we continue conducting our business as usual.

Hot Forex issued a similar statement:

We would like to reassure you that HotForex is operating as normal, and was not affected in any material way.Our strict Risk Management procedures minimized the impact of this event.

Furthermore, we have stayed true to our motto of Honesty, Openness and Transparency. As testament to our commitment to fairness, all negative account balances have been reset to zero and any clients that bought CHF have been paid in full.

 

 

2 Alpari UK Files for Insolvency After the Swiss Removed Currency Cap

A few hours after the Swiss National Bank announced the removal of the cap against the Euro, Alpari UK, one of the forex brokers that we previously featured in our forex brokers reviews has filed for insolvency.

The sudden move by the Swiss Bank to remove a 3-year old cap against the Euro saw volatility in the forex markets rise to an incredible rate while liquidity remained very little. Because of the extremely low liquidity caused by the Swiss Bank announcement, a lot of forex brokers could not close client positions.

A lot of forex traders sustained heavy losses, which in many cases were way over their account Equities, forcing the brokers to carry the liability. In a statement released on their website, the UK broker announced that it was not in a position to carry customer losses and therefore was filing for insolvency.

Alpari UK  becomes the first broker to file for insolvency as other brokers find avenues to get out of the mess. FXCM, another broker who we have had the honor of featuring in our forex broker reviews, has had to borrow money to sustain its operations in addition to cancelling its listing on the New York Stock Exchange. Meanwhile, IronFx, HotForex, among other forex brokers have sent out statements declaring that they are still in operation, and the Swiss Bank announcement had little impacts on their financial statuses.

3 How to Trade Forex Using a PAMM Account

PAMM stands for Percentage Allocation Management Module.

A PAMM account allows investors who have little knowledge about trading forex to invest in the industry where their investment is managed by fund managers. When you open a PAMM account, all your money will be handled by a dedicated funds manager.

Advantages of Using a PAMM Forex Account

  • A PAMM account allows for total transparency of how your invested money is traded. Using a PAMM account, you can track the trades made on your account by the funds manager and withdraw your money at any time without restrictions. We recommend working with the HotForex PAMM accounts.
  • No knowledge of online forex trading is required of the investors. Simply open a PAMM account and let the manager do all the transacting for you. HotForex ranks PAMM account managers according to the amount of profits they are making over time. If you choose wisely, you will be working with PAMM managers who have a proven track record of successful trading.
  • You can diversify your forex investments by investing with different fund managers. If one fund manager has had a bad month, you can still make profits from a successful one.

The Process of Working with a PAMM Account Manager

  1. First, a PAMM Manager opens a PAMM account with the forex broker . The PAMM manager will be required to deposit an agreed minimum deposit into the account and allocate a certain portion of it as the account manager’s fund. The manager will be unable to withdraw the funds allocated as manager’s funds. This serves as an incentive for the trader to exercise caution when trading.
  2. The PAMM manager designs his portfolio including the minimum deposit he will accept from investors, terms of service and percentage of profits investors will pay the fund manager.
  3. The forex broker lists the PAMM account on their website where investors can search for the PAMM account manager they would like to invest with.
  4. The PAMM account manager starts making trades using the money invested in the account as well as his own deposits
  5. Profits (or losses) are shared among the manager and account investors according to the percentage of investment in the account.

Does Kenya Forex Firm offer PAMM Services?

We currently do not have a PAMM account with any forex broker, and therefore we do not manage funds for clients. The best way for you to start trading on a PAMM account is to open an account with IronFX, HotForex or any other broker out there. Alternatively, you can browse our list of top PAMM account managers and choose the one that you would like to invest with.

We also encourage PAMM account managers to list their services with us. Click here to post your listing for free.

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