Wealth Destruction

The franc peg removal has already sent a shockwave of disaster to forex trading outlets across the world.

Retail broker Alpari UK just filed for insolvency on Friday, and New York-listed FXCM Inc, one of the biggest platforms catering to online and retail currency traders, just got a $300 million bailout in order to meet regulatory capital requirements, after its clients suffered $225 million of losses.

I began writing this piece earlier in the week and had written about the financial contagion that would occur as a result of the Swiss' move against the euro. I suggested that we may soon see hedge funds and others begin to collapse as a result of this enormous overnight jump in currency exchange rates.

A few days since I began this Letter, Everest Capital's Global Fund - with $830 million in assets - has now lost all of that money.

Via Reuters:

"Hedge fund manager Marko Dimitrijevic is closing his largest hedge fund, having lost almost all its money after the Swiss National Bank (SNB) scrapped its three-year-old cap on the franc against the euro, Bloomberg news reported on Saturday.

Citing a person familiar with the firm, Bloomberg said the fund had been betting that the Swiss franc would decline. The fund had about $830 million in assets at the end of 2014, according to a client report cited by Bloomberg."

This is just one of many hedge funds that likely had significant exposure to the franc. In the coming days and weeks, be prepared to hear more stories about failing funds.

http://www.equedia.com/critical-shift-swiss-just-screwed-ecb/