George Soros broke the Bank of England on September 16th, 1992. Online trading wasn’t invented back then, so no retail dealers lost money betting against smart retail traders.
January 15th, 2015 , those smart enough to smell blood when central bankers pledge to “enforce the minimum exchange rate with the utmost determination“, broke the Swiss National Bank. By golly, it looks as though the CHF bloodbath is a day several household names in the FX dealer space will not forget.
Darwinex was business as (almost) usual. It wasn’t fully usual because we lost a negligible amount as some customers were margined out and there was no market for them (and therefore, us) to stop their (therefore, our) losses. Then again, broadly speaking, our policy of matching all trades on exchange paid off. Yesterday, like every-day, we were only exposed to negligible counterparty risk. Which means that any the P&L for any trades closed with us was binding, and we will NEVER e-mail a customer to re-quote ANY trade. And since we’re an FCA regulated matched principal broker, YOUR P&L and account balance is in exactly the same privileged position.
If you don’t appreciate the value in that, go ask your friends trading with unregulated dealers.
Looking forward, retail FX will never be the same after this. Hopefully this is a lesson we all, including traders and brokers, but also regulators, learn from. In our humble opinion, the days of OTC (retail) forex are possibly counted.
For our part, we’re in the process of reviewing our leverage policy – we have always recommended to limit leverage, but now realise we should have gone one step further.