FXCM Inc (NASDAQ:FXCM), the biggest US foreign exchange broker by market share, has committed to selling its US accounts after reaching a settlement with the US financial regulators that requires it to exit the US market. The company issued an official announcement on its investor relations website, containing information vital to US clients of the brokerage.
FXCM will be offloading its US accounts to GAIN Capital Holdings Inc (NYSE:GAIN) for an amount that is yet to be determined. The companies have signed a non-binding letter of intent for the transaction. The deal is subject to regulatory approval by US authorities and to a definitive agreement between the firms. GAIN has also notified its investors about the situation.
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FXCM CEO Drew Niv at Finance Magnates London Summit 2016:
The brokers are working on a sale agreement, with FXCM and GAIN expected to announce further details about the account transfer process in the coming days.
GAIN has also notified its investors that it has signed a non-binding letter of intent to acquire the client base of FXCM's U.S. operations.The firm added this is subject to GAIN and FXCM reaching a definitive agreement and to final regulatory approval, which GAIN will attempt to expedite for the benefit of FXCM's customers.
Earlier today the US Commodities Futures Trading Commission (CFTC) issued an announcement that FXCM has reached a settlement with the National Futures Association and the CFTC to pay a $7 million monetary fine.
A statement from the company reads: “The named FXCM entities and principals neither admit nor deny the allegations associated with the settlements.”
US Retail Forex Market Share, December 2016, Source: CFTC Data
In 2016 the net revenues generated by the US business of FXCM amounted to about $48 million. For the first nine months of 2016, the company’s trading revenue from continuing operations was $196.6 million.
The deal won’t affect clients of FXCM that are located outside of the US.
FXCM’s exit from the US market will free up about $52 million in capital. The company will use the funds and the proceeds from the account sale to GAIN Capital to pay its debt to Leucadia National.
No impact on FXCM's global business
The company will continue to service its US clients for an interim period pending the customer-account sale and FXCM’s withdrawal from the US. The company will work together with GAIN Capital for an orderly transition.
The company highlighted in a statement: “FXCM wants to express its most sincere thanks to those U.S. customers who have been with FXCM over the years and wish you all the best of luck following this transition. FXCM wants to stress that these settlements have no impact on any customer of FXCM’s global businesses.”
“FXCM and its global subsidiaries will continue to provide excellent Execution and competitive pricing to its customers overseas through its award-winning technology, customer service and trading tools,” the statement concludes.
