On 15 January 2015 the Swiss National Bank removed the floor it had defended under EURCHF, and the pair fell by an amount no stop loss protected anyone from. Brokers were left with client accounts in deficit and some did not survive the day. It remains the reference event for what a currency peg removal does to a leveraged book, and it is the single best argument for understanding why the franc behaves as it does.
Three structural reasons the franc appreciates under stress
The first is funding. Swiss interest rates have spent long periods at or below the rates of the currencies around them, which makes the franc a cheap borrowing currency. Investors borrow francs, sell them and buy something with a higher yield. When risk appetite disappears, those positions are closed, and closing them means buying francs back. The buying is mechanical, it is concentrated, and it does not care about the level, which is exactly the pattern described in the carry trade and its unwind.
The second is the current account. Switzerland runs a persistent external surplus, driven by pharmaceuticals, precision manufacturing and financial services. A country that sells more than it buys generates steady underlying demand for its currency, so the franc has an upward structural drift that policy has repeatedly had to lean against.
The third is the institutional story: political neutrality, low government debt, a stable legal system and a long tradition of asset protection. That reputation matters less than the first two mechanically, but it explains why the flows arrive quickly rather than gradually. Fuller treatment of the pattern across currencies is in safe haven flows.
What the SNB does about it
A strong franc is a problem for Swiss exporters and it pushes inflation down, so the central bank has actively resisted appreciation for most of the past two decades. It has used deeply negative policy rates and direct intervention in the FX market, funded by expanding its balance sheet, and it has said openly that intervention is part of its toolkit.
For a trader this creates a distinctive market. Franc strength runs into an institution with unlimited domestic currency and a stated willingness to use it, which caps and reverses moves that would otherwise continue. The reverse is also true: when the SNB steps back, the move that was suppressed arrives all at once. The 2015 gap was not a market failure, it was a suppressed adjustment released in a single print.
A defended level is a level where risk accumulates rather than disappears. The longer a central bank holds a line, the more positioning builds against the line, and the larger the move when the line goes.
Reading the pairs
USDCHF is the cleanest instrument for expressing a view on the franc against the dollar, and it inherits everything happening in the dollar itself. Because the franc and the dollar are both bought in a risk off episode, the pair can be strangely quiet during a crisis while EURCHF and GBPCHF move sharply. Traders who watch only USDCHF and conclude the franc is not moving are looking at the wrong cross, and the dollar index is worth checking alongside it.
EURCHF is the pair the SNB cares most about, since the euro area is Switzerland's main trading partner. It is also the pair with the most policy risk embedded in it, which is a different thing from having the most volatility on an average day. USDCHF and EURUSD have historically shown a strong inverse relationship, so a trader long USDCHF and short EURUSD often holds one position twice. Checking exposure across pairs before adding, as covered in currency correlations, prevents that.
Trading around risk off events
Franc strength shows up during a specific class of event: a banking scare, a sovereign debt episode, a geopolitical escalation, a sharp equity drawdown. What it does not do reliably is respond to routine data. Swiss releases are thin and the franc frequently ignores them, taking direction instead from the European Central Bank, from US rates and from the general risk tone.
Two practical consequences. Positions in franc crosses should be sized for a gap rather than for a normal range, because the events that move the franc happen outside market hours as often as inside them, and stops fill where the market reopens. And carry positions financed in francs need to be judged on the unwind risk, not on the nightly credit, since the interest accrues in small amounts and the reversal arrives in one.
The lesson that outlived the peg
The 2015 episode taught the retail industry three things that still hold. Stop losses are instructions, not guarantees, and a gap through a level fills at the next available price. Leverage that is comfortable in a normal market is not comfortable in a discontinuous one. And a broker's own solvency is part of the trader's risk, which is why negative balance protection and client fund segregation stopped being footnotes in the years after.
The franc is a useful instrument precisely because its drivers are legible. Funding flows, an external surplus and an active central bank explain most of what it does, and none of that requires forecasting sentiment. What it demands in return is respect for the shape of its risk: quiet for long stretches, then a single move that does not stop to let you out. Leveraged trading carries a high risk of loss, and franc crosses concentrate that risk into rare events.
"People call the franc a safe haven as if it were a feeling. It is a balance sheet. Money that was borrowed in francs has to be bought back in francs, and that is what you see on the chart."
— Roman Onta, Executive Director, SINGUARD
Key Takeaways
- Franc strength in a crisis is largely the mechanical repurchase of francs borrowed to fund higher yielding positions.
- A persistent Swiss current account surplus gives the currency an upward structural drift that policy has to lean against.
- The SNB has used negative rates and direct intervention, so defended levels build up positioning rather than removing risk.
- January 2015 showed that a stop loss is an instruction to trade, not a guaranteed exit price on a gapping instrument.
Frequently Asked Questions
Is the Swiss franc still a safe haven currency?
The structural drivers behind its behaviour, cheap funding, an external surplus and institutional stability, are still in place, so it continues to attract flows during risk off episodes. The size of the reaction varies with how much carry positioning exists at the time.
What happened to EURCHF in January 2015?
The Swiss National Bank removed the minimum exchange rate it had been defending, and the pair repriced sharply within minutes with very little liquidity in between. Many leveraged positions were closed far beyond their stop levels.
Which franc pair should a trader watch during a crisis?
EURCHF and GBPCHF usually show franc demand most clearly. USDCHF can look calm because the dollar is also being bought, which masks the move in the franc itself.
About the Author
Roman Onta is an Executive Director at SINGUARD. He builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals side by side with his brother Alex Onta, and he helped on the design of eTrader, the division Alex built and leads. His ground is worldwide payment processing, AML compliance and the corporate structures brokers are built on, work the two of them carry together, shaped by executive roles in the UAE and international corporates. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.