CBs do what is in their best interestsRidiculous SNB decision really... More importantly, terrible implementation. They should have announced this at the week-end so market participants would have time to process the information.
First quote after the announcement was around 1.05, few minutes later we were at 0.85. Large IBs/market makers did not even quote prices for hours. Goldman, for example, only started executing trades in the afternoon (LDN time). Arbitrarily decided to execute at 1.03 for all clients. DB, UBS, Citi etc. all suffered large losses. Some HFs closed (Everest main fund), brokers insolvent, prop shops and retail traders blowing up. Nothing left to say really...
Personally I did not trade EURCHF b/c of the price floor. Since I've been EUR short since the first half of 2014 I was lucky. Nobody could have seen this coming though. Not too long ago the SNB reiterated that it would defend the CHF cap. Never trust a CB.
What does it mean for the EUR? Stay short, I'd say. CHF free-float hints at ECB QE on Thursday.
Ridiculous SNB decision really... More importantly, terrible implementation. They should have announced this at the week-end so market participants would have time to process the information.
First quote after the announcement was around 1.05, few minutes later we were at 0.85. Large IBs/market makers did not even quote prices for hours. Goldman, for example, only started executing trades in the afternoon (LDN time). Arbitrarily decided to execute at 1.03 for all clients. DB, UBS, Citi etc. all suffered large losses. Some HFs closed (Everest main fund), brokers insolvent, prop shops and retail traders blowing up. Nothing left to say really...
Personally I did not trade EURCHF b/c of the price floor. Since I've been EUR short since the first half of 2014 I was lucky. Nobody could have seen this coming though. Not too long ago the SNB reiterated that it would defend the CHF cap. Never trust a CB.
What does it mean for the EUR? Stay short, I'd say. CHF free-float hints at ECB QE on Thursday.
it is up to you to protect you business
Ridiculous. If it's up to us, then why do we need police protection from robbers ? Robbers exists on the street as well as in the markets. Consequently they must be compelled to follow the same rules as everyone else.
What happened with CHF was that the retail players were following the rules while the banks and others chose to dispense with the rules by deliberately turning off liquidity as a means of exploitation.
No, you're a total idiot if you think the SNB or any CB for that matter has to set their country's monetary policy around highly leveraged traders.
That's just silly.
Don't blame other people of you own poor trading, you will never learn to specyulate whilst you don't take responsibility for your own mistakes, it is up to you to protect you business, remember anything can and will happen in the markets.
Cheers John
In a robbery, only one party disregards the commonly and implicitly accepted contract of business and robs the other party blind. Since the contract was not honoured, the deal was off and the retail could get their money back.
As the market was unjustifiably closed, all prices occurring after that were null and void.
Can you prove that the market was closed? I saw at dukascopy quotes every minute during the crash.
Those who were short CHF had a contract with a counterparty. The fact that they were short proves that the counterparty honoured the deal to go short. But nobody had a commitment to be counterparty when the shorters wanted to pass the losses to someone else. That was another contract that had to be made. There was no contract at that moment.
Nobody who was out of this market would be willing to be counterparty at that moment. So there were no offers. And probably 1000 times more people wanted to buy CHF than theer were sellers. That is not the same as an unjustifiable closing. I call it common sense from those who had no open position. Risc/reward was not reasonable to become counterparty.
People should always have an exit scenario.
Yes I can prove it. I was not able to exit my long CHF to provide liquidity to others for almost half of a day. Further I was informed the market was suspended. If that wasn't market being closed, I don't know what was. Essentially the lost of liquidity was an artificial creation to force the price higher.
Now we need to find out who shut the market and fine the crap out of them.
Your risk/reward is quite useless if the counterparty has the option of shutting up shop at any moment of their choosing for any reason whatsoever, and for any duration they fancy.