DislikedSupport Your USA Forex Broker! To Retail Traders, FXCM and all Other USA Brokers, Well, if FXCM had a Dealing Desk operation taking the counter-party side of all the retail trades, they would have ended up making a small fortune! Retail traders should not be concerned who is the counter-party to their trades. There always has to be one, no matter who it is. In the case of FXCM, apparently the counter-party was the market makers themselves. And so once again these bastard Robber Bank MMs ripped off a bunch of people, including the "no dealing desk"...Ignored
On the other hand, I find it somewhat unfathomable that these brokerage houses were unable to see the writing on the wall with respect to the Swissie, or, just as a general theme, were blindly willing to accept the notion that a given Central Bank will continue to adhere to a particular policy in light of changing economic circumstances. Late in 2014, after all, FXCM, as well as other brokers first increased margin requirements on Ruble pairs and then stopped offering them altogether after the Russian Central Bank discontinued its "trading band" policy and then ceased to intervene in the currency virtually altogether, both of which it had been historically doing several months, if not years, beforehand. Naturally, the SNB is not the RCB, but is everyone's memory that particularly short?
Even assuming that brokers had learned little, if anything, from the Ruble lesson, is the fact that these various financial institutions are or, at least, should be equipped with top-notch quants and other analysts who could have easily foretold that the SNB's continuing to hold the peg was not a "zero risk" proposition by any stretch of the imagination. The Euro was tanking; what genius at these brokers was advising them that the peg would still, with certainty, hold or that, if it did give way, that the move would not be damaging in light of, for example, COT positioning, which -- in the case of EUR/CHF -- showed that the vast majority of traders were long.
Ultimately, however, I don't think it's my broker's job to cover my stupid ass if I did something stupid; what I do think is that it is my broker's job to make sure that my funds are protected from their doing something stupid. FXCM can claim all day long that there was never any danger that I would not get my money out, but the fact is that they were short $225 million; if everyone with positive equity balances had wanted to get their money out at the same time, they could not have have satisfied their requests; it's as simple as that.
Fireworks are fun ... as long as you don't blow your fingers off.