The floor had been in place since 6 September 2011. The Swiss National Bank said it would not tolerate EURCHF below 1.20 and would buy foreign currency in unlimited quantities to defend that line. For three years and four months the chart obeyed. Traders built positions on the assumption that 1.20 was a wall with a central bank behind it, and they sized those positions the way you size anything with a floor underneath it: large, with a tight stop just below the line, because the downside was supposedly a few pips.
At 09:30 Zurich time on 15 January 2015 the SNB announced the floor was gone. It cut its policy rate at the same time. The announcement was not scheduled in the way an ECB decision is scheduled, and it contradicted public statements made days earlier. Within minutes EURCHF was trading far below 1.20, and for a stretch of that morning there were effectively no two-sided quotes at all in the interbank market. Prices printed in the 0.85 to 1.00 region before the pair stabilised nearer parity later in the day.
What actually happened to the order book
A stop-loss order is not a price. It is a trigger: when the market trades at your level, the order becomes a market order and gets filled at the next available price. In normal conditions the next available price is a fraction of a pip away, so the distinction never matters. On 15 January the next available price was hundreds of pips away, because every liquidity provider pulled its quotes at once.
This is the mechanism behind slippage, and the shock made the extreme tail of it visible. Traders with stops at 1.1980 were filled in the 1.00s. Because leverage on CHF pairs was high in most jurisdictions at the time, a move of that size did not just wipe out an account, it pushed it deep into negative equity. Clients owed brokers money. Brokers owed liquidity providers money.
Two consequences followed within days. Alpari UK entered insolvency proceedings. FXCM, a US-listed retail broker, took an emergency loan from an outside investor to stay solvent after client debit balances landed on its own books. Several smaller shops in Europe and Asia quietly shut their doors. None of that was a technology failure. It was a capital failure caused by an assumption about how far a price could move in one step.
Leveraged trading carries a high risk of loss. The SNB event showed that the loss on a single position is bounded by liquidity, not by the stop level you typed into the ticket.
Why the floor could not last
Defending a floor means buying euros with francs you create. The SNB's balance sheet grew enormously through 2012 to 2014. Once the ECB signalled a large asset purchase programme, the euro was heading lower against everything, and holding 1.20 would have required buying at a pace that made the SNB a very large one-way holder of European debt. A central bank can print its own currency without limit in theory. In practice a balance sheet several times the size of national output is a political problem, not a monetary one.
That is the general lesson about pegs and bands. They break on the side where defending them is expensive. Understanding what a central bank is actually trying to protect matters more than reading its last press release, because the press release will say the commitment is firm right up to the morning it is abandoned. The franc's role as a safe-haven currency was exactly what made the floor unsustainable: every European stress episode pushed more money into it.
What changed in the industry afterwards
Three structural changes came out of the event, and all three are still visible in how a retail account works today.
| Change | What it does | Where it applies |
|---|---|---|
| Negative balance protection | Client account cannot go below zero; the broker absorbs the shortfall | Mandatory for retail clients in the EU, UK and several other regimes |
| Leverage caps | Limits position size relative to deposit, so a gap costs less | Retail caps introduced across the EU, UK, Australia and elsewhere |
| Higher margin on pegged pairs | Brokers price peg risk separately instead of treating it as a quiet pair | Applied per instrument, at the broker's discretion |
The first is the important one. Negative balance protection moves the tail risk from the client to the firm, which is where it can actually be capitalised and hedged. It also changes the broker's job: a firm that offers it has to think about aggregate exposure to a single event, beyond per-client margin. The ESMA leverage caps that arrived in 2018 came from the same reasoning, though the direct trigger was different.
How a trader should read the event now
The wrong takeaway is "avoid CHF pairs". The right one is that any instrument whose calm behaviour depends on an institution's promise carries a step-change risk that no chart shows. Pegged and managed currencies, energy contracts under production agreements, and any market with an official intervention band all sit in that group. So does anything trading in thin hours, which is a smaller version of the same problem covered in weekend gaps.
Practically, that means three habits. Size on the assumption that the stop might fill several times further away than you placed it, especially overnight. Treat any position held through a central bank meeting or a scheduled policy review as a different risk category than an intraday position. And check what your broker's contract says about debit balances before you need to know, not after. Those habits belong in the same document as the rest of your risk management rules, because they are risk rules, not market opinions.
One more thing worth saying plainly. Several traders who were long EURCHF that morning had been right for three years. The position had a stop, a rationale and a track record. It was still the trade that closed their account. Being right for a long time is not the same as being safe, and a strategy that produces a small gain most of the time while carrying an uncapped loss on rare days is a strategy whose real performance you cannot see until the rare day arrives.
"A stop is an instruction to leave, not a promise about the price you leave at. Everyone learns that once, and 2015 was the tuition bill."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- The SNB abandoned the EURCHF 1.20 floor on 15 January 2015 after defending it since September 2011.
- Liquidity providers pulled quotes, so stops filled hundreds of pips away and many accounts went into negative equity.
- Alpari UK entered insolvency and FXCM needed emergency funding because client debit balances landed on the broker.
- Negative balance protection and retail leverage caps are direct descendants of that morning.
Frequently Asked Questions
Why did the Swiss National Bank remove the floor?
Holding the floor required buying foreign currency without limit, which had already expanded the SNB balance sheet to an extreme size. With the ECB moving towards large-scale asset purchases, defending 1.20 would have meant buying at a far faster pace, so the SNB stopped.
Why did stop-loss orders not protect traders?
A stop is a trigger, not a guaranteed price. When it fires, it becomes a market order filled at the next available price. On 15 January 2015 there were almost no quotes for a period, so the next available price was far below the stop level.
Could the same thing happen again?
The same mechanism can repeat in any market whose calm depends on an official commitment, such as a currency peg or an intervention band. Negative balance protection and leverage caps reduce the damage to retail accounts in regulated markets, but they do not stop the price gap itself.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.