Advertisement

Alpari UK: what happens when your broker goes bust?

Alpari UK is the first big forex broker to fall victim to the Swiss National Bank's shock decision. John Stepek looks at what it means for Alpari's customers.

15-1-16-alpari-west-ham-634
Alpari's collapse leaves West Ham without a sponsor

The Swiss National Bank's surprise decision to stop effectively pegging its currency to 1.20 against the euro (after three years of doing so) has claimed its first major scalp foreign exchange broker (and West Ham sponsor) Alpari UK.

Why did this happen?

This happened so rapidly that stop-lossor not, anyone who was short' the Swiss franc against pretty much any other currency would have lost a huge amount of money, almost certainly more than any worst-case scenario they'd have considered.

Advertisement - Article continues below

As a result as Alpari put it in a statement "This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us."

While Alpari had indicated last week that it was insolvent, an announcement on its site now says that it "has not entered a formal insolvency process." Instead "the board of directors are urgently considering all options including a sale and are liaising closely with the FCA."

What happens now?

In the case of Alpari UK, the company specifically stated that "retail client funds continue to be segregated in accordance with FCA rules." In short, regardless of the eventual outcome,if you had money with the company, it should be safe (bar any investment/trading losses actually related to the Swiss move).

So who'll sponsor West Ham now?

What about brokers in general? What if the worst happens?

and

This will cover you up to a £50,000 limit to be clear, this is not about covering losses on your investments, it's about protecting money (or assets) you had on account with your broker. If you were owed more than that, then you would not necessarily get all the money back.

Advertisement
Advertisement

Recommended

Visit/trading/600685/trading-catch-this-coach-company
Trading

Trading: catch this coach company

Bus and coach operator National Express has expanded into promising markets abroad – and it looks cheap
28 Jan 2020
Visit/trading/601397/trading-toast-the-rebound-with-wetherspoon
Trading

Trading: Toast the rebound with Wetherspoon

Wetherspoon, the budget pub chain, is a disciplined and highly profitable operator whose shares now look reasonably priced.
2 Jun 2020
Visit/trading/spread-betting/601322/trading-its-time-for-investors-to-dump-matchcom
Spread betting

Trading: it’s time for investors to dump Match.com

The dating group is grappling with regulators and looks absurdly expensive.
20 May 2020
Visit/trading/601233/trading-switch-over-to-itv
Trading

Trading: switch over to ITV

Broadcaster ITV is in solid shape and the market slump has left it looking far too cheap.
4 May 2020

Most Popular

Visit/economy/uk-economy/601427/covid-bounce-back-loans-and-inflation
UK Economy

What bounce back loans can tell us about how we’ll pay for all this

The government will guarantee emergency "bounce back loans" for small businesses hit by Covid-19. Inevitably, many businesses will default. And there'…
1 Jun 2020
Visit/investments/commodities/601433/commodities-possibly-the-biggest-opportunity-in-todays-markets
Commodities

This looks like the biggest opportunity in today’s markets

With low interest rates and constant money-printing, most assets have become expensive. But one major asset class hasn’t. John Stepek explains why com…
2 Jun 2020
Visit/economy/global-economy/601420/james-ferguson-the-virus-the-lockdown-and-what-comes-next
Global Economy

The MoneyWeek Podcast: James Ferguson on the virus, the lockdown, and what comes next

Merryn talks to MoneyWeek regular James Ferguson of Macrostrategy Partnership about what's happened so far with the virus; whether the lockdown was th…
28 May 2020