Tatiana Kashyrskaia
At the end of last week, the Swiss National Bank, which is Switzerland’s central bank, announced a shocking and unexpected decision to start unpegging the Swiss Franc (its national currency) from the Euro (EURCHF was 1.2). Needless to say that this almost instantly provoked unseen volatility in the Franc-related currency markets, thereby resulting in thousands of retail traders getting major losses resulting from negative balances while Forex brokers had major difficulties. Some Forex companies had to announce insolvency since they fail to cope with the situation due to improper risk management and excessively high leverage offered to retail traders.
It should be noted that the very process damaged companies and traders worldwide. Meanwhile, several financial institutions including the IMF were surprised by such a decision made by Switzerland’s central bank.
Some traders, investors and analysts say that the negative effect of the Swiss National Bank’s decision to unpeg its national currency from the Euro was magnified by the SNB’s decision to raise the key interest rate from 0,25% all the way up to 0.75%, which increased investor’s deposit servicing costs. Meanwhile, local exporters saw the same challenge as well. However, Forex traders and companies now seem to have suffered from the SNB’s unexpected move most of all. Some of the companies operating in the international Forex brokerage industry faced millions (even dozens of millions) of dollars in losses and are still trying to recover from it while fighting the aftershocks.
According to Masterforex-V Academy, this was a truly efficient stress test for the entire Forex industry. The Black Thursday (as they now call it) showed us the best of the best in the contemporary trading industry. While some companies had to report insolvency due to major losses resulting from improper risk management, some other (the minority of) Forex companies reported no damage to them or heir clients and continued their work as usual. Without any doubt, this is the result of efficient work done by those companies to cap the leverage and manage their risks properly so that to provide all of their clients with a truly high level of financial security and safety of funds.
HY Markets is one of such outstanding representatives of the contemporary Forex industry This company managed to come off clear since the company’s management has been wise enough to foresee possible force-majeure and prepare for taking appropriate actions if necessary.
Fortunately, the company passed this stress test with flying colors. The management took timely actions to prevent any negative outcome of the unexpected volatility in the CHF-related currency markets resulting from the SNB’s decisions. HY Markets managed to withstand the negative pressure thanks to managing leverage in wisely while being smart in operating risks at all times. This is a true heavyweight in the Forex industry operating for nearly 30 decades. With that said, the company’s management has a lot of expertise in fighting the consequences of unexpected shocks and resolving major challenges.
It is interesting to not that while other companies had to suspend trading and let their clients’ balances go negative while being unable to control the situation, HY Markets let their clients work (and trade the Swiss Franc in particular) as usual without suffering any losses. It is not accidental that HY Markets has been among the world-class Forex brokers belonging to the ultimate league of Masterforex-V Expo’s ratings of Forex brokers for years. It is also the winner of multiple prestigious awards and the participants of major Forex events held worldwide. This is another reason to value this broker as a reliable partner for any kind of retail Forex traders out there.
This also leads us to believe that while all companies can promise their clients safety and security as well as efficiency, few of them can actually put their words into practice. The bottom line is that the stress tests showed which companies can and should be trusted at all times…
Tatiana Kashyrskaia
