HomeDaily ResultsMegadroid Results: Thur 15th Jan 2015 & Alpari UK Insolvency


Megadroid Results: Thur 15th Jan 2015 & Alpari UK Insolvency — 42 Comments

  1. Excellent profit day.

    I personally trade the early US session, and I have seen some extreme volatility during that time over the past week. I guess that volatility is spilling over into the Megadroid trading session later in the day.

    Just a word of caution to those new to Megadroid.

    Increased volatility does mean more trades and profit, BUT it also increases the chances of a stop loss, which can be 50 to 100 pips. So make sure you don’t trade too big.

  2. Stephan, this is a bit of a shock. Just reading up on it now.

    I’ve had 2 experiences with brokers who became insolvent.

    One was PFG. Fortunately my account was near zero at the time.

    The other was Crown FX. I had about 2k with them, so not much. Several years on I still haven’t seen any of my money.

    The thing about Alpari UK, is that it’s FSA regulated. So my understanding is that accounts up to a certain size are insured. So this could be a good thing for smaller account holders.

  3. Quite a few brokers got hit hard.

    Interactive Brokers lost $120 mill, but they have net capital of $2.6 bill. So it was far from devastating for them. Their share price went down about 7%.

    Much worse situation for FXCM though. They lost $225 mill and they a net capital of only $46 mill !! That sound like a seriously bad situation. Their stock price tumbled 88%. Wouldn’t be surprised if they follow Alpari.

    Ref CFTC data Nov 2014 http://www.cftc.gov/ucm/groups/public/@financialdataforfcms/documents/file/fcmdata1114.pdf.

  4. For those with Alpari accounts, make sure you save full account statements from your MT4 terminal before the accounts get deactivated.

    It’ll be harder to get this information latter on.

  5. Found this on Alpari’s website using the wayback machine. (They’ve actually removed reference to it on the current webpage)

    Ref: https://web.archive.org/web/20141024025032/http://www.alpari.co.uk/regulations

    What is the Financial Services Compensation Scheme?

    The Financial Services Compensation Scheme (FSCS) is the UK’s statutory compensator of last resort for customers of financial services companies.

    In the unlikely event that Alpari UK is unable to meet its financial obligations, you can submit a claim to the FSCS. This scheme protects up to £50,000 per person.

    The FSCS also protects the money in our segregated retail accounts. If a bank holding the funds you have deposited with Alpari UK goes into liquidation you will be able to claim up to £85,000 per person and per institution.

    You can find out more from this booklet (PDF) or on the FSCS website.

    And found this on the FSCS website:

    Information regarding Alpari UK LImited
    16th January 2015

    The Financial Services Compensation Scheme (FSCS) is aware of the situation regarding Alpari UK Limited.

    We are currently monitoring developments and will provide an update on our website as soon as we are in a position to do so.

  6. Hi Richard,

    It seems our deposit at Alpari UK is protected, but I’m afraid how complicated it might be to withdraw it. I suggest that as soon as one has information about the withdraw procedure with Alpari UK we share it here with another account holders.

    I haven’t received any e-mails from them yet, regardless sending e-mail to the Back Office on Friday asking about the withdraw procedure.

  7. Funds up to £85,000 are meant to be insured. So in theory all we’d need to do is submit a claim to the FSCS, and presumably their insurer will pay-up.

    If they weren’t insured, we’d only get a fraction of our deposits, because other expenses take priority i.e. lawyers, accountants, and various admistrators etc.

  8. I wonder how much Alpari lost.

    At least FXCM still exists.

    Wonder if Alpari’s situation would have been better if the UK capped the leverage to 1:50 like the US have done. Although FXCM still lost $225 mill, and presumably most of their accounts are 1:50.

    The risk management practises of these MT4 brokers is horrendous. They can’t blame the SNB. Part of being a broker is being able to deal with unexpected events. They were clearly undercapitalised relative to the value of the clients accounts they were holding.

  9. Now Alpari’s website says this.

    Important announcement

    The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. Retail client funds continue to be segregated in accordance with FCA rules. For the avoidance of any doubt and notwithstanding previous announcements by the company, Alpari (UK) Limited has not entered a formal insolvency process. The board of directors are urgently considering all options including a sale and are liaising closely with the FCA. We hope to make a further announcement shortly.

  10. They’ve updated again, saying they have appointed KPMG as

    Special Administrators appointed to Alpari (UK) Ltd

    Upon the application of the directors of Alpari (UK) Ltd, on Monday 19 January 2015, the High Court appointed Richard Heis, Samantha Bewick and Mark Firmin of KPMG LLP as joint special administrators of Alpari (UK) Ltd, under the Special Administration Regime (SAR). Alpari (UK) Ltd is a company incorporated in the UK.
    Alpari (UK) Ltd applied for insolvency on Monday 19 January 2015 following the decision on Thursday 15 January 2015 by the Swiss National Bank to remove the informal peg to the euro at around 1.20 Swiss francs. The announcement by the SNB prompted volatility across the foreign exchange markets which saw the company and many of its clients make large losses. After a weekend spent in urgent discussions with various parties with a view to selling the company, these efforts were ultimately unsuccessful.
    We have had a number of enquiries from interested parties in relation to the company’s business. We will be speaking with these parties and others over the next few days, and hope to secure a deal to preserve the business and jobs as far as possible.

    For all queries, please contact:

    The administrators will endeavour to respond to your query as soon as possible.

  11. Highly doubt it.

    Pretty sure the traders are not liable for negative balances, and even if they were Alpari is currently being run by the liquidator anyway, and I doubt they’d be spending money on Lawyers trying to extract more money from traders. It would be of no benefit for them.

    KPMG’s job is to either find a buyer, and if they can’t do that, then liquidate the assets and distribute what’s left over back to the traders.

  12. Hi Richard, to be honest I’m not sure if it’s the case considering the small print in our contracts with Alpari and other brokers.

    I know that some brokers in my country (Brazil) have this requirement from traders in contract…. not sure if they practice it though.

    After this episode it’s something that I will try to be sure from now on. MD might have nailed it on the day, but it could be the opposite…

  13. That’s what I was afraid of. A lot of people will have to put money to pay for Alpari inability to close trades in that situation.

    My account is positive and I expect to be paid, but after reading this bit I have another question: “The Joint Special Administrators are continuing to analyse the trades which were closed on Thursday 15 and Friday 16 January in order to confirm all Client Account balances”…..

    Would they claim that a positive balance is actually smaller or even become negative after this?? On my view it can be highly dubious!

  14. I think they’re trying to work out which accounts lost because of the SNB announcement, and which accounts didn’t.

    I had no open positions on my Alpari accounts at the time, so I expect the balances the remain unchanged.

    It’ll only get messy for those with open CHF positions, that went negative, because there’d be argument over the correct closing price, and how much of the negative balance should be covered by the client. The client could easily argue that Alpari are partly at fault for not closing the position earlier. If a few big traders are involved, I suspect they’d have lawyers negotiating with the Alpari administrators.

  15. I have have an account with AxiTrader. You are liable for losses over and above your account ie if you had $5k in your account and you lost $20K you are liable for the $15k owing. I asked them this question specifically.. and was told by email you would be liable. They said its in the Terms and Conditions. Also note that segregated accounts are pooled in one big account and if it goes down to Zero you could lose all your money.

  16. I’ve finally received the link from KPMG/Alpari to agree to my balances. Fortunately it’s matching my records… I’ve stated that I intend to use FSCS as they have informed that it might result in having the money back more quickly….. let’s see…. they say FSCS will contact us back. I hope that they do that quickly and hopefully we won’t face too much bureaucracy.

  17. I still haven’t received my link yet.

    I’m thinking FSCS might be the more reliable option, because they have guaranteed returning balances up to 50,000.

    KPMG on the other hand, have been a bit vague on how much they’ll actually return, and are charging ridiculous hourly rates which is consuming remaining assets quickly.

  18. Just an update….

    I finally got access to the the Alpari Claims Portal on 10th April.

    The reported balances were the same.

    I elected to claim through the FSCS rather than the administrator because I think the KPMG administrator will be slower plus there’s a strong chance the administrator won’t return 100% of my money.

  19. I’m also getting lots of emails from the broker “ETX Capital”. Sounds like the administrator sold them Alpari’s client list, and they’re very keen for Alapri clients to transfer their funds across.

    I won’t be setting up an account with them at this stage. My focus is on retrieving all my money. I don’t really want a 3rd party involved.

    I’m so glad Alpari was insured.

  20. 2 days ago the Administrator (i.e. KPMG) sent me an email asking me to go to the Claims Portal for a second time. They want more information.

    I’ve chosen the FSCS option, IMO this is the best way to get 100% of my money returned because the “segregated pool” is fast drying up thanks to KPGM’s expenses.

  21. Hi Richard,
    I’ve chosen to claim through FSCS too.
    I’ve also opted to receive the money from ETX Capital. They called me and they have ensured me that they would take care of all the process, even if I decide to withdraw the money from ETX later.
    I’m considering to keep using Megadroid now using ETX. It would be nice if you decide to set up and report the results from them as well….

  22. Check out part of this email I got from the KPMG administrators today…

    Quantum of First Distribution

    The Joint Special Administrators will confirm the exact distribution amount shortly after 31 May 2015, however, at present the Joint Special Administrators expect it to be circa 51 cents in the $ (USD).

    Timing of First Distribution

    The Joint Special Administrators intend to make the First Client Money Distribution within two months of the last date for proving.

    For further information regarding the First Client Money Distribution please refer to the notice on the Joint Special Administrators’ website (www.kpmg.com/uk/alpari).

    Only paying about 0.50 in the dollar!!!!

    Glad I went with the FSCS.

    Last I heard KPMG with paying themselves around $2000 USD per hour, and that was coming out of the remaining Alpari assets. So there’s incentive for them to drag their feet.

    I think the regulators need to start enforcing some rules on the administrators to prevent these situations from happening i.e. cap their accounting fees.

  23. When you log into the portal can you see that you opted for FSCS?
    Because regardless opting for FSCS the portal is only showing that I agreed the balance, but it’s not stating that claim was assigned to FSCS…. Same for you?

  24. Same for me Roger.

    The first time I entered the info into the Claims Portal, after I finished it displayed the FSCS option on the summary page.

    But a week or 2 latter they wanted me to re-login to the Claims Portal so I could provide more information i.e. my Bank Account details.

    Even though I select the FSCS option again, it doesn’t display on the summary page, and they didn’t send a confirmation email like they’re meant to.

    I’ve emailed them to make 100% sure they have my FSCS option recorded.

  25. I haven’t received the confirmation email too.

    I’ve emailed them, but they came back stating only that I have agreed to the balance (standard emails….). E-mailed again stating I wanted to confirm about FSCS and not balance and they haven’t replied….

  26. I received an email response from KPMG today. They confirmed that my claim has been assigned to FSCS.

    That’s good.

    So I just have to wait now. I’m pretty confident all my money will be returned, but it might take another month or 2.

  27. Hi Richard, good news. After 4 months waiting FSCS have finally refunded me by depositing into my new ETX Capital account.
    I hope your money has been refunded as well. Spread currently at 0.9-1.2 pips… not bad!
    I will try and test ETX. Fingers crossed.

    Thanks for sharing all info here.

  28. Great news Roger!

    I think the lesson here is how important it is to use a properly regulated broker, because if things go wrong you at least have a decent chance of getting some or all of your money back.

    The UK FSCS is excellent. Without them we’d probably have only got back about 50%.

  29. Received my Alpari money today.

    100% was returned to my bank account from the FSCS.

    So it took about 6 months.

    Very happy with this outcome, because I’d only get a fraction of my account balance without the insurance coverage.

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