The Swiss Franc Floor, 2015Easy

A central bank promised a floor for three years, repeated the promise weeks before abandoning it, and moved a major currency thirty per cent in minutes.

3 min read · 469 words · Updated 4 Sep 2026

What happened

• September 2011 — with the franc surging as a safe haven, the Swiss National Bank announces it will not tolerate EUR/CHF below 1.20 and will buy foreign currency in unlimited quantities to defend that floor.
• 2011–14 — the floor holds. Volatility in the pair collapses; the level becomes a background assumption in countless positions and hedges.
• Weeks before — officials publicly reaffirm the policy as a cornerstone.
• 15 January 2015 — the SNB abandons the floor without warning. The franc appreciates by roughly 30% within minutes; liquidity effectively disappears during the move.
• Immediately after — retail brokers whose clients were leveraged short the franc face losses beyond client equity. Some, including Alpari UK, fail; others require emergency capital.

The mechanism

• A defended floor suppresses measured volatility — and measured volatility is what risk models, margin requirements and position sizes are built on. The calm was a policy, not a property of the market.
• Stop-loss orders are instructions, not guarantees. In a gap there is no price between the trigger and the fill; orders executed far below where clients expected.
• Leverage sized for a 1% day met a 30% one. Losses exceeded client deposits, converting a market event into a broker credit event.
• The exit had to be a surprise. Any signal would have been front-run, so the policy was, by necessity, defended right up until it was abandoned.

What it teaches

• Pegs and floors do not reduce risk; they postpone and concentrate it. Low volatility inside a band says nothing about the move when the band goes.
• Size positions for gaps, not for daily ranges — the position-sizing calculator assumes your stop fills; assume once that it does not.
• Official reassurance is not information. A central bank defending a policy cannot warn you before ending it.
• Know your broker's balance sheet if you use leverage: negative-balance protection matters only if the firm survives to honour it.

The mechanisms behind this

Every case on this site is an instrument or a mechanism doing exactly what it was built to do, in a situation nobody had pictured. These are the pages that explain the machinery:

• FX spot — the market that moved thirty per cent with no price in between.
• Volatility — a defended floor suppresses measured volatility — the calm was policy.
• CFDs — the leveraged retail positions that ended below zero.
• Market vs. limit orders — a stop is an instruction, not a guarantee, and a gap has no price inside it.