You didn't think the story of the Swiss franc was going to go away, did you? The latest casualty of Switzerland's decision to abandon the franc-euro cap has been foreign-exchange brokerages - especially US-based, FXCM.
At first thought, one might think that currency volatility would be good (or at least not bad) for a brokerage. More people trading, more activity, more fees, right?
Well, not so fast. Currency trades are usually highly leveraged meaning that traders tend to make big bets with little money down. Brokerages require traders to maintain a healthy balance in their margin accounts but with yesterday's wild swings, many brokerage clients are unable to make their margin call. As a result, FXCM is owed approximately $225 million from clients.
FXCM has halted trading today as they seek ways to meet their capital requirements.
This story isn't going away soon.