Alpari UK declares insolvency after Swiss franc surge

Alpari UK has declared insolvency as a result of the losses incurred by clients following the surge in the Swiss franc on Thursday.The broker said a majority of clients sustained losses which exceeded their account equity after the Swiss National Bank unexpectedly scrapped its three-year policy of capping the value of the Swiss franc's exchange rate against the euro at 1.20."Where a client cannot cover this loss, it is passed on to us. This has forced Alpari UK Limited to confirm today that it has entered into insolvency," Alpari said.The franc surged by as much as 41% against the euro after the Swiss central bank announced its change in policy, which was launched around the time of the European debt crisis in September 2011.Rival spread-betting provider IG Group on Friday was reported to be scouting for takeover targets among those hurt by the short-term forex losses.Alpari UK analyst Craig Erlam called the actions by the SNB "idiotic"."The move by the SNB generated a lot of questions regarding what motivated such an irresponsible and abrupt move given that only a few days before the central bank had referred to the 1.20 floor as the 'cornerstone' of its monetary policy," he said."SNB Chairman tried to convince us all that the decision was well thought out but I'm sure many would agree that unless under exceptional circumstances, a well thought out decision of this magnitude should take longer than 48 hours."Also on Friday, US retail foreign-exchange brokerage FXCM entered discussions with Jefferies to raise $200m after it said clients owed it approximately $225m due to the wild currency swings.