FXCM lost $225M in a day when the Swiss franc surged — and was banned from US markets

FXCM was one of the world's largest retail forex brokers, handling millions of trades a day for individual currency traders. On January 15, 2015, the Swiss National Bank unexpectedly removed its three-year-old cap on the Swiss franc against the euro. In minutes, the franc surged by as much as 30% against the euro. FXCM, which had not hedged against this event, lost $225 million — more than its entire net worth.

The loss pushed FXCM into breach of regulatory capital requirements. The next day, the company secured a $300 million emergency loan from Leucadia (later Jefferies Financial Group) at 10% interest, rising to 17% if not repaid within a year. FXCM forgave 90% of the negative balances in client accounts that had been wiped out by the franc's move. The rescue saved the firm from immediate collapse, but the damage was done.

Two years later, the CFTC fined FXCM $7 million for secretly routing client trades through a market maker it controlled — a practice that was the opposite of the 'no dealing desk' model it advertised. The company was banned from US markets. Its founder and CEO Drew Niv resigned. US customer accounts were sold to Gain Capital for about $7.2 million. In November 2017, FXCM's parent company Global Brokerage filed for Chapter 11 bankruptcy. Shareholders lost over 98% of their investment.