Interactive Brokers continues to collect debts stemming from SNB “Black Swan” event

Maria Nikolova

As of December 31, 2019, Interactive Brokers has incurred cumulative losses, net of hedging activity and debt collection efforts, of $115 million.

Online trading major Interactive Brokers Group, Inc. (NASDAQ:IBKR) has filed its 10-K annual report for 2019 with the Securities and Exchange Commission (SEC), with the document revealing that the company continues to pursue debt collection from customers who incurred losses in excess of their deposits on January 15, 2015.

On January 15, 2015, due to the sudden move in the value of the Swiss franc that followed an unprecedented action by the Swiss National Bank, which removed a previously instituted and repeatedly reconfirmed cap of the currency relative to the Euro, a number of Interactive Brokers’ customers who held currency futures and spot positions suffered losses in excess of their deposits with the company. Interactive Brokers says it took immediate action to hedge its exposure to the foreign currency receivables from these customers.

Interactive Brokers’ financial results for the first quarter of 2015 were negatively impacted by a $121 million net loss due to the sudden move in the value of the Swiss franc, causing several of its customers who held currency futures and spot positions to suffer losses in excess of their deposits with the company. The annual report for 2015 showed that the losses related to this “Black Swan” event, net of hedging activity and debt collection efforts, to be approximately $119 million.

As of December 31, 2018, Interactive Brokers has incurred cumulative losses, net of hedging activity and debt collection efforts, of $116 million.

In the annual report for 2019, Interactive Brokers explains the results for 2015 include an unusual loss of $137 million recorded as customer bad debt. As of December 31, 2019, Interactive Brokers has incurred cumulative losses, net of hedging activity and debt collection efforts, of $115 million.

“We continue to actively pursue collection of the debts. The ultimate effect of this incident on our results will depend upon the outcome of our debt collection efforts”, the brokerage says.

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