Pat494
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CHF mess
Hi. I am an Australian journalist looking to speak to FX traders who made or lost money on the CHF mess in Switzerland. If you or someone you know were willing to speak with me briefly, my email is [email protected] . Thank you.
Hi. I am an Australian journalist looking to speak to FX traders who made or lost money on the CHF mess in Switzerland. If you or someone you know were willing to speak with me briefly, my email is [email protected] . Thank you.
Jack o'Clubs
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I don't think you understand the pressure the currency was under. There wasn't time to prepare the markets. SNB either had to abandon the peg or burn additional billions (of real money) supporting something that ultimately wasn't supportable. When the markets really start pushing it's probably only the Fed, globally, that has the firepower to push back. SNB's hand was forced, as simple as that.
Atilla
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Both the ECB and SNB must have contingency plans what/if?
One would assume these central bankers do communicate in some way giving each other heads up. Otherwise market has been expecting QE announcements on previous occasions but German opposition was also noted. QE is not new. Been on the table sometime now. Personally, I think they must have been pondering this decision ever since QE and the OMT policy ruling was up for decision and how they would react. Maybe, they believed OMJ would over-rule OMT's as illegal.
So the fact that SNB have not acted before and have done so now indicates (perhaps clearly indicates) a new move from the ECB on QE.
Central bankers these days are the key play makers and all play the same game announcing policy changes and directions with hints and subtle comments well in advance. So the SNB not only misled the market but broke away from no-surprises policy.
Either way to support the policy few days ago and then to announce something like this mid-week is amateurish at best and damn right bloody minded and callous contempt of market reaction.
Did they under-estimate, misjudge or were totally not aware of these consequences???
Did they not know markets were/are already nervous and shock announcements like these could have big impact on sentiments?
They weren't planning ahead or leading the market but more like re-acting to it with their pants falling around the ankles. For highly paid top bankers in this current environment, they are useless bunch of blundering idiots. Wouldn't be surprised if Thomas Jordan geezer is replaced sooner than later after this fiasco. imo Uselesssssssss.....
One would assume these central bankers do communicate in some way giving each other heads up. Otherwise market has been expecting QE announcements on previous occasions but German opposition was also noted. QE is not new. Been on the table sometime now. Personally, I think they must have been pondering this decision ever since QE and the OMT policy ruling was up for decision and how they would react. Maybe, they believed OMJ would over-rule OMT's as illegal.
So the fact that SNB have not acted before and have done so now indicates (perhaps clearly indicates) a new move from the ECB on QE.
Central bankers these days are the key play makers and all play the same game announcing policy changes and directions with hints and subtle comments well in advance. So the SNB not only misled the market but broke away from no-surprises policy.
Either way to support the policy few days ago and then to announce something like this mid-week is amateurish at best and damn right bloody minded and callous contempt of market reaction.
Did they under-estimate, misjudge or were totally not aware of these consequences???
Did they not know markets were/are already nervous and shock announcements like these could have big impact on sentiments?
They weren't planning ahead or leading the market but more like re-acting to it with their pants falling around the ankles. For highly paid top bankers in this current environment, they are useless bunch of blundering idiots. Wouldn't be surprised if Thomas Jordan geezer is replaced sooner than later after this fiasco. imo Uselesssssssss.....
Atilla
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I disagree about SNB not having time.
Reckon this was either a stupid amateurish balls-up or deliberate and considered action!
I'll givem the benefit of the doubt and assume they made a stupid mistake, whilst being the correct action. A little like slowing down or slamming the brakes for an emergency stop. Wreckless ill-considered action.
Atilla
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One other consideration.
It is still possible ECB may not announce QE and say it doesn't work.
They may wait for Greek elections to play out. If they do vote out then Euro likely to come under even more pressure.
With this last weeks move I'd start to factor in anything and everything.
They too may decide to play silly buggers. :whistling
It is still possible ECB may not announce QE and say it doesn't work.
They may wait for Greek elections to play out. If they do vote out then Euro likely to come under even more pressure.
With this last weeks move I'd start to factor in anything and everything.
They too may decide to play silly buggers. :whistling
tar
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I am sure the country now isn't under pressure at all !
Are you a banker by any chance ?
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Pippy5000
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I wasn't directly affected by the crash. In fact, I was horrified of the SNB moving the CHF in the other direction due to an unexpected touch on 1.20 when the EUR tanked. So I tip-toed around CHF pairs.
I say that I wasn't directly affected, but in reality I am devastated about the demise of the ECN model. I would have gladly accepted short-term disaster in favor of long-term prosperity. I've seen a lot of cheerleaders gloating about how they and their market maker brokers emerged unscathed or even with a profit and I just have to shake my head. There comes a time in every trader's career when they progress to the point where market maker brokers will not allow them to trade. I really can't blame them. Why would a market maker allow someone to beat them for large amounts of money month after month? It doesn't make sense and it isn't a successful business model. Therefore, when I hear traders gloating about how they were unscathed, I just want to say, "You must not be making much money doing this, my friend, or you wouldn't be gloating."
When you trade with a market maker. You are capped. You might not realize it, but you are really just an important pawn in their overall plan. They have to have 1/3 winning traders and 2/3 losing traders. You can win, but you can't win too much, or you will be quietly asked to leave or be given an excuse for why you have to leave.
I am very much saddened that the ECN brokers are hanging on by a thread with staggering losses while the dubious market makers have profit to the tune of $10,000,000. I hope that the ECN brokers can adapt and introduce new safeguards. Otherwise, our industry was sent back ten years.
I say that I wasn't directly affected, but in reality I am devastated about the demise of the ECN model. I would have gladly accepted short-term disaster in favor of long-term prosperity. I've seen a lot of cheerleaders gloating about how they and their market maker brokers emerged unscathed or even with a profit and I just have to shake my head. There comes a time in every trader's career when they progress to the point where market maker brokers will not allow them to trade. I really can't blame them. Why would a market maker allow someone to beat them for large amounts of money month after month? It doesn't make sense and it isn't a successful business model. Therefore, when I hear traders gloating about how they were unscathed, I just want to say, "You must not be making much money doing this, my friend, or you wouldn't be gloating."
When you trade with a market maker. You are capped. You might not realize it, but you are really just an important pawn in their overall plan. They have to have 1/3 winning traders and 2/3 losing traders. You can win, but you can't win too much, or you will be quietly asked to leave or be given an excuse for why you have to leave.
I am very much saddened that the ECN brokers are hanging on by a thread with staggering losses while the dubious market makers have profit to the tune of $10,000,000. I hope that the ECN brokers can adapt and introduce new safeguards. Otherwise, our industry was sent back ten years.
NVP
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everyone will be claiming how they saw it coming .........but the proof is in the profit physically made
and then I get the feeling if anyone makes a noise about big bucys made......surely the relevant securities commission will investigate them for insider dealing ?
N
NVP
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take it from a person who worked for a swiss company for 7 years........no one tells them what to do .......and as a government they don't worry too much about the rest of the world......
and a lot of my ex pat friends now laughing all the way to the bank this weekend :whistling
N
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In my point of view it is clear signal of the end of the EURO as we know it today.
The SNB must have some information (or have come to some conclusion) that the peg was impossible to defend any longer and was better to quit now before wasting anymore money. In short, they expect in the upcoming future an incredible inflow of money into Switzerland.
Bearing in mind that the Swiss bank secrecy is dead, there can only be few events left which could force the SNB to take such an extreme measure. The first affected by this decision were themselves, as they are one of the largest (if not the largest) holders of Euros. Some calculations put their losses at 10%+ of the Swiss GDP. And I am not even mentioning how this affect their exports, tourist industry, etc. They are for sure going into recession in the next couple of quarters. And the Swiss are not recognized as stupid people, so if they were willing to inflict this pain on themselves it is because the alternative was/is much worse.
I can only see three scenarios here....from less probable to more probable....
1.- They are aware of some geopolitical problem/war going to happen in the immediate future. Or some sort of geopolitical tensions such as Russia cutting the gas to the West, China doing some funny business with dollars, etc.
2.- They expect/know the ECB is going to do an incredible large QE which will bring the value of the EURO to historic lows.
3.- My favourite....They expect/know the ECB is going to dissapoint the markets with the version of QE we will know on Thursday. At the moment everything is fine, because we are all hoping and expecting QE, but the moment it is announced, if it does not fullfil the expectations of the markets, that is, there is the confidence in Central Banks gone. Then we can have tensions again with the peripheral yields and the inevitable talk of Euro break up again. That will mean bank runs and inflow of money into Switzerland.
The markets is expecting big QE in short time with debt mutualization.
Looking at the rumours in the press they are going to get small to medium QE in long time with no or very little debt mutualization.
So obviously they wanted to be ahead on this one. But whatever it is that is coming, is no doubt big. Let's see, I imagine we are going to learn soon what made them take that radical decision so abrutply.
The SNB must have some information (or have come to some conclusion) that the peg was impossible to defend any longer and was better to quit now before wasting anymore money. In short, they expect in the upcoming future an incredible inflow of money into Switzerland.
Bearing in mind that the Swiss bank secrecy is dead, there can only be few events left which could force the SNB to take such an extreme measure. The first affected by this decision were themselves, as they are one of the largest (if not the largest) holders of Euros. Some calculations put their losses at 10%+ of the Swiss GDP. And I am not even mentioning how this affect their exports, tourist industry, etc. They are for sure going into recession in the next couple of quarters. And the Swiss are not recognized as stupid people, so if they were willing to inflict this pain on themselves it is because the alternative was/is much worse.
I can only see three scenarios here....from less probable to more probable....
1.- They are aware of some geopolitical problem/war going to happen in the immediate future. Or some sort of geopolitical tensions such as Russia cutting the gas to the West, China doing some funny business with dollars, etc.
2.- They expect/know the ECB is going to do an incredible large QE which will bring the value of the EURO to historic lows.
3.- My favourite....They expect/know the ECB is going to dissapoint the markets with the version of QE we will know on Thursday. At the moment everything is fine, because we are all hoping and expecting QE, but the moment it is announced, if it does not fullfil the expectations of the markets, that is, there is the confidence in Central Banks gone. Then we can have tensions again with the peripheral yields and the inevitable talk of Euro break up again. That will mean bank runs and inflow of money into Switzerland.
The markets is expecting big QE in short time with debt mutualization.
Looking at the rumours in the press they are going to get small to medium QE in long time with no or very little debt mutualization.
So obviously they wanted to be ahead on this one. But whatever it is that is coming, is no doubt big. Let's see, I imagine we are going to learn soon what made them take that radical decision so abrutply.
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Scenario No.3 sounds good. The ECB etc. have consistently done too little too late, making the break-up of the EUR zone, the thing they are ostensibly trying to avoid, more likely. Past history suggests Draghi will disappoint the markets again on Thursday.
But what if the Swiss shock is the shot of adrenalin that the ECB needed to make them appreciate the danger of their actions? Maybe the Swiss have done a huge favour by ringing such a huge alarm bell? Maybe now the ECB will double its efforts and save the EUR. Its a long shot, but I would not be surprised to hear of the most dramatic action yet commenced / announced by the ECB on Thursday or even before. I am staying away from European currencies until at least then.
But what if the Swiss shock is the shot of adrenalin that the ECB needed to make them appreciate the danger of their actions? Maybe the Swiss have done a huge favour by ringing such a huge alarm bell? Maybe now the ECB will double its efforts and save the EUR. Its a long shot, but I would not be surprised to hear of the most dramatic action yet commenced / announced by the ECB on Thursday or even before. I am staying away from European currencies until at least then.
Atilla
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Agree there is likely to be much pain all around but how would indicating their thoughts to the market lets say over a weekend or within a few days change the outcome? Central bankers are not there to make money like retail banks but conduct and exercise policy to direct the market.
Why take the surprise shock reversal of policy all withing three days and defend that position contrary to international conduct of central bank policy / strategy and behaviour?
I'm afraid this question has not been answered to satisfaction.
All very well saying they are smart bankers and no one tells them what to do, when etc, but there will come a time when they will want to exercise a course of action and communicate that desire to the market. The market will then ask why should they act on their say so and if they can be trusted... Thus they have lost credibility imo.
You have come up with three possibilities. I think one can add a few more. The point being there is now uncertainty. Market doesn't like uncertainty and it bears a cost in risk premium.
So when you say they 'must' have a valid reason - I take it you are giving them the benefit of the doubt that they can't be as stupid as that for what they have done?
imo Retail banks are there to screw clients to get make as much as money as they can. I'm guessing central bankers now joining this queueu on what they can do you for!!!
For me the ECJ legal opinion was the trigger. As soon as that vain hope of support for the Swiss position was eliminated, the green light was on for ECB QE, and the SNB's game was up. They knew they couldn't defend against serious QE so they had to get out of the game sooner or later but preferably before this Thursday. Actually, getting out earlier woud make sense in case the ECB jumped the gun. The SNB and the ECB are oppponents playing poker against each other with no obligations to each other's constituents or those in other currency zones.
Agree there is likely to be much pain all around but how would indicating their thoughts to the market lets say over a weekend or within a few days change the outcome? Central bankers are not there to make money like retail banks but conduct and exercise policy to direct the market.
Why take the surprise shock reversal of policy all withing three days and defend that position contrary to international conduct of central bank policy / strategy and behaviour?
I'm afraid this question has not been answered to satisfaction.
All very well saying they are smart bankers and no one tells them what to do, when etc, but there will come a time when they will want to exercise a course of action and communicate that desire to the market. The market will then ask why should they act on their say so and if they can be trusted... Thus they have lost credibility imo.
You have come up with three possibilities. I think one can add a few more. The point being there is now uncertainty. Market doesn't like uncertainty and it bears a cost in risk premium.
So when you say they 'must' have a valid reason - I take it you are giving them the benefit of the doubt that they can't be as stupid as that for what they have done?
imo Retail banks are there to screw clients to get make as much as money as they can. I'm guessing central bankers now joining this queueu on what they can do you for!!!
Yes, I don't think this was a stupid decsion or that they are stupid. I am convinced this was the best they could come with.
Regarding your other comment, sure, they do not need to inform us all, but come on, not telling the IMF or the FED? That they did not do this is public information now. It was bad manners and above all very poor coordination between people who are supposed to be colleagues and working on a common goal.
Last but not least, they could have intervene in the market earlier, making the decline slower and less traumatic. In my point of view there was no need to have some currencies dropping 40% before they decided to do something. There were hours of no liquidity for some people and I am not speaking here about retail traders or brokers but big boys.
Atilla
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I also don't think it was a stupid decision either but the way they have conducted them selves is similar to financial hooliganism with no regard to the other side. Bloody minded stupidity imo.
Fact that we are talking about Alpari and good many others having lost money and jobs is clear indication that it was a shock to the market. I can only imagine those who made money could only be the very few or those with inside information.
If the release of the news announcement was better handled; impact may have been the same or better but certainly not worse.
Knives out for the SNB!!!
