Drew Niv built his brokerage firm, FXCM, into a profit machine by turning the global foreign-exchange market into a playground for day traders. Using leverage to amplify their bets, customers could profit from even minuscule currency moves. Of course, they could lose big, too. Niv was aware of the dangers. "Leverage is the enemy," he said in a May 2014 interview in his office near Wall Street. "The big move, it's what kills you." The big move just arrived. On Jan. 15, the Swiss central bank abandoned its policy of limiting the value of the Swiss franc to €1.2 and let its national currency float freely. The decision shocked currency markets, sent the Swiss franc soaring, and blew a $225 million hole in FXCM as customer losses mounted. Shares of FXCM plunged as low as 98C on Jan. 16 before trading was halted and Niv grabbed a financial lifeline from Leucadia National, owner of the investment bank Jefferies Group. Leucadia will earn interest of as much as 17 percent on the $300 million loan and can force a sale of the brokerage, keeping at least half of the proceeds beyond the loan amount, FXCM said in a Jan. 19 statement.
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