Auckland-based currency brokerage Global Brokers NZ said it is closing due to losses suffered after the Swiss central bank's shock move to ditch the franc's cap against the euro.
In a statement posted on the website of associated company Excel Markets, director David Johnson said most of its clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity.
"When a client cannot cover their losses it is passed onto us. GBL can no longer meet regulatory minimum capitalisation requirements of NZ$1 million and will not be able to resume business."
``Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those.''
The franc surged as much as 38 percent versus the greenback overnight after the Swiss National Bank's move in Zurich and gained more than 15 percent against all of more than 150 currencies.