Trump tariffs stirred up the foreign exchange market, and UBS stopped selling foreign exchange derivatives to customers.

Ubs has asked its employees to reduce the sale of complex foreign exchange derivatives.

On Tuesday, July 29th, media reports citing three people familiar with the matter said that UBS has informed its client managers to stop promoting a complex foreign exchange derivative called the "Range Target Profit Forward Contract" (RTPF for short) to most clients.

The underlying reason is that the high tariff policy announced by Trump in early April caused significant fluctuations in the US dollar, resulting in huge losses for many RTPF products invested by UBS clients. This also forced UBS to urgently halt the sales of such products and even compensate over 100 clients to soothe their emotions and restore their reputation. Doubts from the outside world about the sales behavior of these products and whether they are suitable for customers are constantly heating up.

RTPF: Limited returns, unlimited losses, only suitable for those with a high-risk preference

RTPF is a structured foreign exchange product specifically designed for high-net-worth clients. Its operating principle is similar to this - the client and the bank agree that as long as the exchange rate of the US dollar against the Swiss franc remains within a certain range, they will exchange currencies at a fixed interest rate. If the exchange rate deviates from this range, the contract will still be enforced. The result is that customers may continuously exchange foreign currency at extremely unfavorable exchange rates, resulting in significant losses.

This product is inherently high-risk and was supposed to be sold only to professional investors. Currently, it is restricted or strictly regulated in the UK, Spain, and several other Asian markets. However, some of UBS's clients are not "experts". Even some clients used the money from mortgaged properties to invest without understanding the risks, which is extremely risky.

A UBS client disclosed that his client manager recently emphasized that such high-risk structured foreign exchange products (such as RTPF) should now be limited to "the most professional" investors and that product suitability needs to be subject to more rigorous review.

This customer said that the account managers who used to actively promote products have now become much more cautious: "This time, he didn't even bring any materials; he just came to 'chat'." He said they had been informed that they would no longer actively promote these products.

Another person familiar with the matter added that UBS is still selling such products, but on a significantly reduced scale.

After Trump's tariff announcement, the US dollar depreciated rapidly, and many RTPF contracts triggered loss conditions. Ubs's clients were forced to continuously exchange currency at the spread rate, and some clients suffered "unforeseeable" high losses.

Ubs was forced to activate its crisis management mechanism, stop promoting such products to the majority of clients, pay "goodwill compensation" to over 100 clients, initiate internal reviews and risk assessment training, examine the sales behavior of at least six client managers, and have been in contact with affected clients since the beginning of this year.

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