Retail currency brokers survived the Swiss franc’s surge in January, but they will take more hits as some choose not to pursue bankruptcy clients who lost money, according to the head of one of the market’s biggest players.

Speaking to Reuters after completing the purchase of British spread-betting firm City Index in March, US-based Gain Capital Holdings CEO Glenn Stevens said US and British regulators were actively looking at the retail sector after some high-profile losses on the franc, but they were unlikely to put severe limits on retailers.

Many traders have cut leverage

A number of the big retail trading platforms, including IG, Saxobank and FXCM, are owed money by clients who lost everything on their trading accounts and more when the franc jumped almost 40 per cent on January 15.

Many, including Gain, have increased margins and cut the leverage that they offer customers since then. They say that makes speculation about formal limits moot.

Gain, one of the market’s biggest players with 225,000 retail clients and more than $1 billion in client assets, has written off debts from clients, and Stevens said he expected others would do the same.

Many of those hurt are not financial professionals and say they are effectively bankrupt, leading to a string of negative media stories for the brokers.

“They’ll send three nasty ‘grams to the small guy and hope that the guy caves,” Stevens said. “But they may send the lawyers to knock on the door of the guy who owes seven figures.”

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