Forex broker Gain Capital Holdings Inc has informed that it has reached a definitive agreement to acquire the US clients of rival FXCM Inc.
Gain Capital stated that the acquired clients represented about $2.4 billion in average daily trading volume at FXCM in Q4-2016, or about $53 billion in monthly volume – roughly 20% of FXCM’s overall retail forex volume.
As reported before, CEO Drew Niv was banned from the US Retail Forex sector, following settlement of allegations that FXCM defrauded its customers over the course of several years as to the nature of its market making activities. Both FXCM and Gain Capital each proceeded to put out awkward and clearly hastily-constructed press releases, announcing that FXCM had ‘sold’ its US clients to Gain Capital and its Forex.com and GTX brands.
But further investigation reveals that the agreement between FXCM and Gain Capital wasn’t really finalized, nor were terms and price agreed upon. In Gain Capital’s words, the original agreement was a ‘non-binding letter of intent to acquire the client base of FXCM’s U.S. operations‘.
Gain went on to state that the transaction ‘is subject to Gain and FXCM reaching a definitive agreement a… if a final agreement is reached.‘
Even the title of Gain’s press release Monday evening stated that the company was ‘in discussion‘ to acquire FXCM’s US operations.
It seems as though FXCM did not want to leave their (soon-to-be-former) US clients hanging, and so came to a hastily-agreed-upon ‘deal’ with Gain Capital to announce a new home for those clients, even though details hadn’t been finalized.
FXCM had more than $50 million of its own money tied up with US regulators. After paying its $7 million fine, the company should now be able to put most of that money to good use in paying down its high-interest loan from Leucadia National Corp, the balance of which was hovering near the $150 million level at year-end.
Gain Capital’s press release on the now-final agreement reads as follows:
Gain Capital Agrees To Acquire Client Base Of FXCM’s U.S. Operations
Former FXCM clients will be transferred to FOREX.com
BEDMINSTER, N.J., Feb. 7, 2017 /PRNewswire/ — GAIN Capital Holdings, Inc. (NYSE: GCAP) (“GAIN” or “the Company”), a global provider of online trading services, announced that it has entered into a definitive agreement to acquire the client base of FXCM’s U.S. operations. For the 3 months ended December 31, 2016, average daily volume from customers of FXCM’s U.S. operations was approximately $2.4 billion. Financial terms of the transaction were not disclosed.
Under the terms of the agreement, customers of FXCM’s U.S. regulated business will be transferred to GAIN Capital’s retail trading service, FOREX.com (www.forex.com). The transaction is subject to final regulatory approval. It is expected to close before the end of February.
“We are excited to welcome customers of FXCM’s U.S. operations to our award-winning FOREX.com service,” said Glenn Stevens, CEO, GAIN Capital. “They will become part of one of the largest and most well-capitalized providers of retail FX trading services globally. At GAIN Capital, we pride ourselves on our 17-year track record of protecting our clients and delivering on their FX trading needs.”
