FXCM Share Buyout on the Table? Charles Schwab Emerges as Possible Suitor

Charles Schwab Corp has emerged as a darkhorse candidate to buyout shares of FXCM (NYSE:FXCM), following the recent Leucadia lifeline last week, with a premium of $5.25 per share being seen as a plausible figure, according to a Benzinga report.

While on the surface the emergence of Charles Schwab as a takeover candidate would appear to be 'out of left field', the two firms have an existing relationship. As reported in May 2013, Charles Schwab is a white label customer of FXCM, having integrated their Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term services within the OptionsXpress platform. Therefore, management from the two firms have familiarity with each other which would help Charles Schwab in its analysis of an FXCM buyout.

Speaking to Benzinga about the potential of Charles Schwab as a buyer, Jeff Wilkins, Managing Director of ThinkLiquidity, stated the rumor made sense “Last week, the stock was trading around $17, and the only thing different is the cash situation and possible reputational damage, if Charles Schwab is a suitor, it brings immediate credibility to the table.”

At the time of writing, FXCM’s share price was hovering at $2.41 per share (-22.26%) during US trading. A possible buyout by either Charles Schwab or any unnamed entity certainly has the potential to throw the price into an even greater state of Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Trad Read this Term, following the recent suspension of trading and consequent -88% loss in share price earlier this week.

Earlier today, it was revealed that FXCM drew an investigation from Kirby McInerney LLP, exploring claims against the firm’s Board of Directors. This occurred on the heels of last week's CFTC investigation, as well as two US law firms publicly stating that they are investigating FXCM for possible violations of the Securities Exchange Act 1934 10(b) and 20(a).