2 FX Brokers Suffer "Significant Losses" After SNB Surprise, "In Breach Of Regulatory | Reviews of Brokers and Data Feeds

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2 FX Brokers Suffer "Significant Losses" After SNB Surprise, "In Breach Of Regulatory

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swinger View Post
How exactly does this work? Clients suffered losses because they couldn't unwind short CHF positions due to illiquidity or being caught off guard, and Oanda is going to make them whole? Did Oanda have a net long CHF position that they never hedged that allows them to do this?

Supposed, your statistics say that most of the sheep are wrong most of the time, what would you do as a broker?

No hedge? - No, because the retail bus guys compromise your own soundness.
Differential hedge? - Many brokers hedge the difference between customer longs and shorts to get a net zero exposure under most market conditions.
Full hedge of the customer positions? - A noneconomical solution, because you would hedge positions that are already hedged by other customers' positions.
Overhedge? - There, the matter becomes questionable, because some use their superior knowledge to multiply the hedge, i.e. they do not only protect their own financial rating but explicitly operate against their customers.

So, you should at least be aware which way your broker moves - trading desks vs DMA are good indicators for the inquiry.

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