One Swiss Franc coins are seen in this illustration picture in Zurich
One Swiss Franc coins are seen in this illustration picture in Zurich Reuters

The Swiss National Bank's shock policy reversal has rendered forex trader Alpari UK insolvent only one day after the country abandoned the euro cap.

The SNB revealed on 15 January that it would no longer cap the Swiss franc's value against the euro, sending the currency soaring as much as 30% in a chaotic day of trading.

Alpari UK, in which its parent company Alpari sponsors Premiership football team West Ham United, said in a shock statement that it was now filing for insolvency following the SNB's move.

"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," said Alpari UK in a statement online.

"This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us.

"This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. Retail client funds continue to be segregated in accordance with Financial Conduct Authority (FCA) rules."

Traders were caught unaware by the surprise decision of the SNB to eliminate the ceiling it had maintained on the Swiss franc's value, causing carnage in the forex trading market.

Financial spread-betting IG Group declared it could take a £30m hit as a result of the SNB's decision.

Currency speculators, particularly large hedge funds with short positions in the Swiss franc, are staring massive losses in the face.

Mark Noble