Aamanya AG v Ballinger & Co: FX broker must pay market value on regulatory close-out

The Commercial Court has held that an FX payments firm was entitled to close out a client's forward contracts when it formed the view that they fell outside its regulatory permissions. However, it could not simply cancel them, and it must pay the client their market value.

In Aamanya AG v Ballinger & Co Ltd [2026] EWHC 2905 (Comm), Mr Justice Stanley awarded Aamanya USD 3,057,019.89 and dismissed Ballinger's counterclaim in deceit.

Background

Ballinger is not authorised by the FCA but is registered as a payment institution. It offered FX forwards in reliance on the "means of payment" exclusion in Article 10 of Commission Delegated Regulation 2017/565. That exclusion covers physically settled contracts entered into to facilitate payment for identifiable goods, services or direct investment.

Aamanya, a Swiss company providing treasury functions for a pharmaceutical group, entered into 25 forwards between April 2021 and January 2022. That followed an earlier agreed close-out prompted by an FCA inquiry, after which Aamanya signed a representation that its trades would fall within the exclusion. In March 2022, after proposals to settle trades in tranches that Ballinger regarded as "recycling" funds, Ballinger invoked clause 4.6 of its terms. That clause allows close-out where, "in the view of" Ballinger, a forward "becomes a derivative product". It then cancelled the trades at par while closing its back-to-back positions at market, which would have left it a profit of around GBP 3.5 million.

The regulatory exclusion

The judge made several observations on the exclusion. It is transaction-specific, not client-specific, and is tested only when a contract is entered into. A later change in the customer's purpose cannot take a trade outside it. Speculation is not inherently objectionable; the regime channels it to authorised firms. Under section 26 of the Financial Services and Markets Act 2000, an agreement made in breach of the general prohibition is unenforceable only against the client.

Right to close out

Aamanya argued that "becomes" required an actual change, realistically only a retrospective regulatory reclassification. Although semantically more natural, that reading would leave clause 4.6 almost no work to do. In the context of Ballinger's "view", a contract could "become" a derivative product when Ballinger came to see it differently. Pre-contractual assurances about the clause's purpose were inadmissible and caught by the entire agreement clause, and no estoppel by convention arose.

Applying Braganza v BP Shipping Ltd [2015] UKSC 17, Ballinger's view was rational even though the judge considered it probably wrong.

Close-out means market value

The judge construed "close out" as booking opposite trades at market rates, following Marex Financial Ltd v Creative Finance Ltd [2013] EWHC 2155 (Comm). Clause 4.6 itself distinguished "cancel" from "close out", and clause 19.1 envisaged payment on termination. FX forwards are commercially assets with a present value. Allowing one party to make that value vanish without any breach by the other would not reflect what reasonable parties intended. Had the contract been silent, a term would have been implied. No close-out fees were deductible, as Ballinger acted on its own initiative.

Counterclaim dismissed

The deceit claim failed. Aamanya's chief financial officer had disclosed at the outset that the company also traded speculatively and accepted that Ballinger could not offer that. He was found to have honestly intended to trade within the exclusion, using other providers for speculation. The recycling proposal was made openly, and Ballinger proved no loss, having profited from the relationship.

Oliver Assersohn KC and Rachel Carver, instructed by O'Melveny & Myers LLP, appeared for Aamanya. Emmanuel Sheppard, instructed by Brown Rudnick LLP, appeared for Ballinger.