FXCM Inc. on Friday updated its negative-balance policy,
offering clients protection for the first $50,000 of losses over a
24-hour period.
Clients will be responsible for negative balances--aggregated
across all FXCM accounts--above that amount, regardless of market
conditions.
A representative from the company wasn't immediately available
for comment about the changes.
The foreign-exchange trader's update comes as it has been
chasing $276 million from retail clients who were caught on the
wrong side of bets on the Swiss franc in January. The Swiss franc
surged nearly 30% against the euro in the minutes following the
Swiss National Bank's surprise decision to stop reining in the
currency's value. Collateral put down to guarantee those bets
wasn't sufficient to cover the currency move on that day, which was
unprecedented. It has said that it will forgive the majority of the
negative balances.
To continue operations, FXCM secured a $300 million loan from
Jefferies Group LLC parent Leucadia National Corp., and as of early
March has repaid $12 million.
FXCM also plans to stop trading a number of currencies,
including the Hong Kong dollar and Danish krone, to avoid
volatility caused by possible future intervention by governments in
currency markets, The Wall Street Journal earlier reported.
Shares of FXCM, inactive premarket, have declined 88% this year
through Thursday's close.
Write to Angela Chen at angela.chen@dowjones.com
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