Shares of leading foreign-exchange
broker FXCM were suspended as trade opened Friday, after the company
admitted that the sharp rise in the Swiss franc had possibly left it
capital-short.
The New York
Stock Exchange suspended the shares after they plunged nearly 90 percent
in pre-market trade, due to FXCM's admission that some clients lost
heavily on the franc's big shift, and their accounts could not cover the
losses.
As a result of the
Swiss National Bank's decision the prior day to lift the ceiling on the
franc, sending it sharply higher, "clients experienced significant
losses, generated negative equity balances owed to FXCM of approximately
$225 million," FXCM said.
"As a result of these debit balances, the company may be in breach of some regulatory capital requirements."At the same time a second forex broker, Interactive Brokers Group, said uncovered losses accrued by its customers ran to $120 million.
Interactive Brokers said, however, that the shortfall amounted to less than 2.5 percent of the company's net worth.
Shares in the company fell 6.2 percent in early trade.
The Swiss National Bank unexpectedly announced Thursday that it was abandoning the minimum rate of 1.20 francs against the euro that it had stood by for more than three years.
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