EPS Exchange Rate

  • Anonymous
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Posted: Tue, 24/02/2009 - 15:07

In case this gets lost somewhere I thought I'd start a new topic. Moderators could perhaps sticky this (if possible) and lock it.

I asked the Treasury in relation to EPS/EPS II exchange rate for Edge forex accounts. This was the reply I obtained today (within a few hours of email)

Dear Mr XXXX

The exchange rate to be used is the closing mid point rate as published by the Financial Times on 9th October 2008.

The euro rate was 1.263

Yours truly,


Officer IOM Treasury

I would hazard a guess that the $US rate will be 9 October rate as well.

I'm sure this will make someone's day...

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A thought

  • Anonymous
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  • Thu, 26/02/2009 - 14:17

Is there any chance that all the currency a/c holders could fill in their application forms for EPS2 stating that they only accept the payment on the basis of the exchange rate used being set at a current date?

I asked similar question on

  • Anonymous
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  • Thu, 26/02/2009 - 12:00

I asked similar question on phone to Rachel Hargreaves at Treasury about US$.
Was told similar - that the US$:UK£ exchange rate fixed by Early Payment scheme would be as of 9th October and was: 1.7239
As to the discrepancy between that and what the DCS would pay out (rate fixed at point of winding-up, I believe), was told 2 times they would get back to me but no response...

Exchange rate

  • Anonymous
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  • Wed, 25/02/2009 - 03:41

I try not to think about it, I was about to exchange my sterling into dollars and there is got stuck in kaupthing, now its gone down about 25%. Do you think I can request to be paid in dollars at the exchange rate as of October 9th?

Dollar Exchange Rate - EPS - who keep the profit ?

  • Anonymous
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  • Sun, 01/03/2009 - 18:29

If the IOMG are using the rate of the 9th October to calculate the £10,000 EPS2 payment but liquidation guaranteed to and the SOA looking likely to use an exchange rate in the future then a number of things strike me.

1) If you can afford not to claim the EPS payment you will be better of in the future to the tune of approx £2000 as the EPS2 will deduct around $18000 from your balance which would otherwise be converted to sterling at the later rate.

2) If this is the case who benefits from the money if you do claim ? Does the IOMG reclaim the dollar amount from your account and then convert it to sterling and pocket the extra or does the LP pay them £10,000 and he makes the profit.
Either way, as with the proposed date in the SOA foreign currency depositors are putting more into the pot than they are taking out.

If you do claim the EPS at what point do the IOMG recover this money from you ?
Are they reimbursed from the first payment under either liquidation or SOA, by which point the exchange rate will have been set, will probably differ and then the amount of extra money will be apparent and in what currency do they reclaim it ?

I raised this question with MS last week

  • Anonymous
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  • Sun, 01/03/2009 - 21:59

"9. Assuming EPS2 goes ahead based on exchange rates at 8Oct08 as EPS1, foreign currency depositors who are in the fortunate position of having less than the equivalent of GBP10k owing, will be paid-up. However if the DCS or SOA is subsequently based on a later date for exchange rates, would they be entitled to a balancing payment from the Liquidator/Scheme Manager?
A: Both the scheme information and the EPS2 rules are unclear and so it is impossible to comment on what would happen regarding this situation. He confirmed that the foreign currency issue is still not clarified."

So a bit of a body-swerve at this time

Dollar Exchange Rate - EPS - who keep the profit ?

  • Anonymous
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  • Sun, 01/03/2009 - 19:01

I am not at all sure that you have this right. If, for example, the EPS pays you £9000 then it will seek to recover £9000 in sterling from the bank. Therefore the Treasury's claim against the bank in respect of that £9,000 will be £9,000 sterling, not around $US18,000 at the October 2008 exchange rate. That £9,000 will be recovered from the bank in the liquidation or SoA at the exchange rate to be applied by the bank, not at an exchange rate determined by the EPS.

That, in any event, is how I think it should work - does anyone have any information that suggests otherwise?

Working on the basis of common sense, which may be a mistake on my part, the only interest that the EPS should have in exchange rates is in determining whether there is sufficient deposit in an account to merit a payment in full under the EPS. It may well be that the Treasury applies an October 2008 exchange rate to the balance in your account to determine this, and that would lead to a result that you have less sterling equivalent in your account than would otherwise be the case. The effect of that would be that in some cases (those in which depositors' foreign currency accounts are close to the EPS limit) depositors are paid less under the EPS than they ought to be, although it would be balanced out later in the liquidation or SoA.

Dollar Exchange Rate - EPS - who keeps the profit ?

  • Anonymous
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  • Sun, 01/03/2009 - 19:27

that sounds logical (but when has anything they have proposed met this criteria)
Providing you have significantly more than £10,000 equivalent at either exchange rate in your account then they will recover £10,000 at the rate of either liquidation or SOA so there rate has no relevance.
If you are on the cusp then they use the rate as at 9th October to determine how much to pay you under the EPS and then any difference would be paid out when the rate is set officially.