Interactive Brokers Group Inc. (IBKR) is unlikely to recoup
trading losses suffered by its clients in the wake of the Swiss
National Bank's surprise decision last week to remove a cap on the
value of the franc, the brokerage's chief executive said
Tuesday.
The broker, which conducts trades for retail investors and
others, saw losses of about $120 million on Thursday after the
franc shot up against the euro, dollar and other major currencies.
The move went against wagers that the franc would fall, resulting
in steep losses, particularly for investors who had leveraged their
bets.
The broker is unlikely to recover those losses, Chief Executive
Thomas Peterffy said in a conference call with analysts following
the company's earnings release. The largest losses come from
customers living in five areas outside the U.S., including Spain
and Hong Kong. The laws of the countries and the degree of solvency
of the investors involved could make repayment impossible, Mr.
Peterffy said.
Most of the losses came in the currency futures market, Mr.
Peterffy said.
Interactive Brokers expects to increase margin requirements, the
amount of collateral investors must provide up front as a
percentage of any trade, Mr. Peterffy said.
The company's shares were down 1.85% to $27.60 in after-hours
trading. The stock closed up 0.1% at $28.12 before the earnings
release.
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