Is Alpari UK insolvent? Apparently no, as other options are being considered


So is it, or isn’t it?

Alpari UK has issued a new statement on its website, contradicting what it had itself posted on Friday. On Friday, Alpari UK indicated that it had entered insolvency following losses suffered in the Swiss Franc mega-move Thursday.

Alpari UK’s new statement (repeated below) on its website states that Alpari UK has not yet entered a formal insolvency process, and that ‘all options’ are being considered, including a sale of the company. Alpari expects to make a further announcement shortly.

Alpari’s new statement follows:

Alpari UK second annoucement

Our take on what has happened? We believe that, similar to what FXCM did bringing in a new investor with a major capital injection, Alpari UK is also negotiating with potential investors (in cooperation with Alpari UK’s regulator, the FCA) to being fresh cash into the company before the opening of trading Monday.

If Alpari UK can find a new source of capital keeping it onside of its regulatory obligations, then it could likely survive and continue operating. Similarly, if Alpari UK can sell itself or its client base to a well-capitalized third party before Monday morning then Alpari UK’s owner (the Alpari Group) could salvage some value from the company.

Stay tuned to LeapRate as we continue to cover this story.

For comparison purposes, the original Alpari UK statement from Friday is repeated below:

Alpari bankruptcy announcement

We would like to remind our readers that the Alpari UK (possible) insolvency does not affect other Alpari Group companies, including flagship entity Alpari Russia.

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  • Wife of Alpari employee

    WOW fingers crossed. What’s the source?

    • Alpari UK’s website (screenshot above in our article), at http://www.alpari.com. Note that the rest of the website is down, clicking on any website page leads to the we’re-not-insolvent-yet message.

      • abcd

        sorry i meant to ask if it’s certain it has to be announced before market opening on Monday

        • No. As we wrote, that’s ‘our take’ on the situation. But we believe it’d be hard to keep any clients if Monday arrives and nothing gets announced. Clients would demand their money back directly and via the FCA, forcing the company to either pay them back or declare insolvency. As the statement says, Alpari expects to make an announcement shortly. We’ll see,,,

          • abcd

            ok, i see. thank you very much for taking the time to reply.

  • AwesomeAndy

    What clowns are in charge over there? Daclaring insolvency prematurely? Its staggering..

    • Hi Andy. We don’t necessarily disagree, but I don’t think its fair to kick someone when they’re down. Friday morning Alpari UK was (likely) unable to honor client withdrawals or trades (being offside of regulatory capital requirements), so they were basically forced to close shop, and state that they were technically insolvent. Now that trading’s closed for the weekend, they have a couple of days to pull together some sort of deal to either stay open or at least monetize their assets (i.e. their client base). Stay tuned, we’ll see…

      • Jerry

        Sorry they are dead. No company in their right mind would buy them. Let them go bankrupt the break the employment contracts and the football deal.

  • Janus

    They chose the Saxo Bank model, go back and change the prices for the trades.

    Which I could go back too and change the prices on old trades.

  • Client

    I hope they will be back as my friend has fund with them. She is very worry.

  • Janus

    Probably the problems are different from broker to broker.

    There are those having the orders traded in the Interbank Market – their problem is apparently the trades who blew their account, with giant losses exceeding their account. The broker have to cover.

    Then we have the brokers who did not place the orders in the market, but kept the orders in a “bucket” – they win big time if all clients were short CHF.

    Then we have the mixed scenario. What seems to be their solution is to adjust the winning trades to fund the loosing traders, make the winners pay for the losers, which is a brave and nice thought, but unfortunately illegal.

    Or is this adjusting of the prices back in time, cause their system was “out of sync” internally, quoting the wrong prices, or the trading desk quoting the wrong prices ? If this is the case, I think this is not an excuse which legally can be used.

  • Janus

    Lets say we have a bucket shop broker, where 70% of the traders were short, and 30% were long.

    The winning 30% have a gigantic win, and the loosing traders an even higher gigantic loss. But in terms of cash flow, the gigantic win, exceeds by far the , with a gigantic amount, the accouint value of the loosing traders.

    So only solution for a bucket shop is to try get the money from the loosing traders taking their house, car etc, or/and change the prices for the winning traders. Which is what they apparently are doing now.

  • Janus

    Then we have another scenario, where some of the losing traders had a stop loss in place. How is this handled, since the bucket shop can claim “inliquid market”. But looking at statement from a broker like TICKMILL, they hadnt a single requote during the flash, this excuse can hardly be used, but probably the financial regulator will most probably allow the broker to use this excuse even the excuse is not valid

  • Andrew Saks McLeod

    Risk management is key, as always, to overcoming potentially terminal occurrences such as the Swiss Franc situation last friday. The difficulty for many retail brokerages in the aftermath of this, is that if they were so exposed that one day’s trading took them from a healthy company with billions of turnover per month to completely bankrupt, the imminent regulatory scrutiny that will ensue plus having to face bankruptcy will be perhaps not as bad as if they are bought by another company and fail to attract clients because clients may worry about their trades not being filled in a situation like this. It seems that we are exiting the period where retail clients were concerned about segregation of client funds from operating capital, as most regulated brokers now do this, compared to 5 or 6 years ago when many unregulated firms existed and did not segregate funds, plus the regulatory reforms such as Dodd-Frank in the US and EMIR in Europe require fully segregated client funds so that if this happens, funds can be returned but the difficulty now is securing open trades against loss.

  • Erhan Gunay

    Hello,

    I have some deposit on AlpariUK. Can someone please respond me, am I going to be able to withdraw my deposit?

    • Erhan – I would imagine that even in a worst-case scenario where Alpari UK does enter insolvency if no buyout/investment occurs, that all client funds are properly segregated and will be returned in a timely manner. Might take a few weeks though.

      • Erhan Gunay

        Thank you very much for your quick response. I am a college student and have been trading in markets for 2-3 months now, that’s why I don’t have too much experience.

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Is Alpari UK insolvent? Apparently no, as other options are being considered

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