, is a retailbrokerfor trading on theforeign exchange market. FXCM allows people to speculate on the foreign exchange market and provides trading incontract for difference(CFDs) on majorindicesand commodities such asgoldandcrude oil. It is based inLondon.
The company was banned from United States markets for defrauding its customers.23Its former parent company,Global Brokerage, Inc.filed for bankruptcy on December 11, 2017.4The operating company, known as FXCM Group, is now owned byJefferies Financial Group, which changed its name from Leucadia National Corporation in 2018.5Global Brokerage shareholders lost over 98% of their investment since January 2015.6
On February 6, 2017, the firm agreed to pay a $7 million penalty to settle a suit from theU.S. Commodity Futures Trading Commission(CFTC) involving fraudulent misrepresentation by FXCM to its customers and to regulators. FXCM withdrew its CFTC registration and agreed not to re-register in the future, effectively banning it from trading in the United States.7Three top managers resigned under regulatory pressure and the majority owner of the firm changed its name to Global Brokerage Inc., effective January 27, 2017.891011
Global Brokerage filed for bankruptcy in November 2017, but officially reorganized in February 2018. While the company technically owns a 51% equity stake in FXCM Group, its agreement with Leucadia and FXCM about future distributions of cash flows places its real economic interest in FXCM at 10 to 50%. Leucadia remains the de facto parent company of the FXCM Group.1213
A Managing Director ofLeucadia National, which before the bankruptcy held a 49.9% equity stake in the operating company,14was appointed chairman of the FXCM Group board.15Its U.S. accounts were sold toGain Capital. About 40,000 customer accounts were sold at about $375 each.916
20092014: Legal issues and initial public offering
20152017: Swiss franc jump and U.S. license loss
2017present: Bankruptcy and ownership by Jefferies
Forex Capital Markets was founded in 1999 in New York, and was one of the early developers of andelectronic trading platformfor trading on theforeign exchange market. Initially, the firm was called Shalish Capital Markets, but after one year, rebranded as FXCM. In 2003, FXCM expanded overseas when it opened an office in London which became regulated by the UKFinancial Services Authority.17
In January 2003, FXCM entered into a partnership withRefcogroup, one of the largest US futures brokers at the time. Refco took a 35% stake in FXCM and licensed the FXCM software for use by its own clients. Refco filed for bankruptcy on October 17, 2005, a week after a $430 million fraud was discovered, and two months after itsinitial public offering. Refcos CEOPhillip R. Bennettwas later convicted of the fraud.18
In November 2005, Refco agreed, in part, to sell its 35% stake back (which included 15,000 customer accounts) to FXCM for $110 million.19In March 2006, however, Refcos creditors disallowed the deal and, later, denied a separate $130 million bid by FXCM.20Refcos stake in FXCM was eventually sold to a consortium of buyers, includingLehman Brothers Holdings.21
In May 2010, FXCM, Inc. purchased the UK-based, ODL Group. FXCM had previously acquired ODLs U.S. business in January 2009. The 2010 acquisition made FXCM the largest retail forex broker in the world with over 200,000 clients and assets of around $800 million.2223
In December 2010, FXCM completed aninitial public offeringand began trading on theNew York Stock Exchangeunder the ticker symbol, FXCM. Share prices started at $14 with 15,060,000 shares for a total share capital of $211 million.242526In its IPOprospectus, FXCM described its no dealing desk trade execution.
When our customer executes a trade on the best price quotation offered by our FX market makers, we act as a credit intermediary, or riskless principal, simultaneously entering into offsetting trades with both the customer and the FX market maker. We earn fees by adding a markup to the price provided by the FX market makers and generate our trading revenues based on the volume of transactions, not trading profits or losses.27
In August 2011, theNational Futures Association(NFA) issued a $2-million fine to FXCM forslippagemalpractice. All clients affected by price slippage were compensated within 30 days as part of the terms of the NFA deal.2829In October of that year, the Commodity Futures Trading Commission (CFTC) ordered FXCM to pay $14.2 million in restitution to clients who had not been awarded positive slippage gains.3031The following year, in February and March 2011, several class actions lawsuits were filed against FXCM, alleging fraud and racketeering from deceptive and unfair trade practices, and misleading shareholders during the 2010IPO.323334From 2005-January 2017, FXCM faced a total of 13 CFTC reparations cases, 17 NFA arbitration decisions, and 8 other regulatory actions in the U.S.35
In June 2012, FXCM purchased a controlling stake in Lucid Markets, a London-based automated trading group focused on currency trading. FXCM also entered into a deal withCredit Suisseto develop the FastMatchelectronic communication network(ECN).363738In 2013, FXCM bought a $12-millionnoteissued by Infinium Capital Management, a high-speed trader based inChicago.39FXCM later purchased five trading desks and some physical assets from Infinium in March 2014.40
In February 2014 the UKFinancial Conduct Authority(FCA) fined FXCM and FXCM Securities Ltd (FXCM UK) 4 million for slippage violations and for failing to inform the FCA of the CFTC investigation of the same practices. About 6 million was also paid in restitution to FXCM UKs clients for a total of 10 million ($16.9 million) in fines.4142
On January 15, 2015 following a large increase in the price ofSwiss francs, FXCM lost $225 million and was in breach of regulatory capital requirements.43The following day, the company received a $300-million bailout loan with a 10% interest rate from Leucadia in order to meet its capital requirements. Details of the deal showed that the interest rate could go as high as 17%.4445Later in January, FXCM announced that it would be forgiving 90% of its accounts that incurred negative balances as a result of the unexpected Swiss franc price movement.4647In September 2016, Leucadia extended the original two-year loan by one year.48
In February 2017, the CFTC fined FXCM, Inc. and three founding partners (including Drew Niv) $7 million for engaging in fraudulent activities. The CFTC found that the companys no dealing desk model (known as adirect market accesssystem) routed trades through a market maker, Effex Capital, that was allegedly supported and controlled by FXCM. FXCM was then barred by the CFTC and the NFA as were the three founding partners. In response, FXCM, Inc. changed its name to Global Brokerage, Inc. and named Brendan Callan the interim CEO, replacing Drew Niv. The company also named Jimmy Hallac, a managing director at Leucadia, the chairman.24950All 40,000 of FXCMs U.S. accounts were sold to Gain Capital.9
Global Brokerage, Inc. remained listed onNASDAQunder the ticker symbol, GLBR. In May 2017, Global Brokerage was notified by NASDAQ that the market value of its stocks were not sufficient for continued listing.51In August of that year, FXCM sold its stake in the FastMatch ECN for $46.7 million and used that money to repay part of the Leucadia loan. At that point, FXCM still owed $66.8 million on the loan.52In October 2017, the FXCM Group terminated a management agreement with Global Brokerage. The following month, FXCM clarified that, while Global Brokerage held a 50.1% equity interest in the company, it held a minority economic interest. Leucadia owned a 49.9% equity share with a 65% economic interest.53
Global Brokerage, Inc. filed for Chapter 11 bankruptcy in November 2017 and was delisted from NASDAQ in December 2017.535455Global Brokerage later reorganized out of bankruptcy in February 2018. At that time, however, Global Brokerages real economic interest in the FXCM Group was between 10 and 50% depending on the amount of distributions FXCM makes.13Also in February 2018, FXCM rebranded itself as FXCM: A Leucadia Company.12As of March 2018, FXCM remained the second-largest retail forex broker outside ofJapan.56
FXCM Group Elevates Brendan Callan to CEO Following Successful Interim Stint.
Martin, Katie (February 7, regulators slap down FXCM for trading against own clients.
Exclusive: FXCM UK does not expect market maker repercussions like in the US. LeapRate. May 18, 2017
Nikolova, Maria (November 14, 2017).Global Brokerage expects to commence Chapter 11 bankruptcy case by December 20, 2017.
Leucadia to shed most non-financial assets, rename as Jefferies
Atkins, Dorothy (February 6, 2017).FXCM To Pay $7 M For Hiding Deal With Market Maker.
Chavez-Dreyfuss, Gertrude (February 21, 2017).FXCM changes company name; appoints interim CEO.
Nguyen, Lananh (February 24, 2017).Gain Capital Is Set to Become the Biggest U.S. Retail FX Provider. Bloomberg
Linnane, Ciara (February 21, 2017).FXCM names interim CEO, changes name to Global Brokerage.
NFA bars New York retail foreign exchange dealer Forex Capital Markets, LLC and its principals Dror Niv, William Ahdout and Ornit Niv from membership. NFA. February 6, 2017
Exclusive: FXCM rebrands, adds Leucadia into its logo. LeapRate. February 21, 2018
Global Brokerage successfully exits bankruptcy, convertible notes replaced. LeapRate. February 9, 2018
FXCM remains in the game with March volumes up 12% to $225 billion. April 12, 2017
Breaking: FXCM Group Promotes Brendan Callan to CEO Leucadia Appoints Chairman. February 21, 2017
GAIN Capital puts sum paid for FXCM US client accounts at $7.2m at end of Q32017. FinanceFeeds. November 9, 2017.
Zian, Mashit (October 2, 2015).FXCM Sells Forex News Website DailyFX.com for $40 Million.
Ex-Refco Chief Sentenced to 16 Years in Cover-UpThe New York TimesAssociated Press. July 4, 2008.ISSN0362-4331.
Politi, James; Simonian, Haig (November 11, 2005).Refco agrees to sell part of forex brokerage.
McMahon, Chris (January 31, 2007).Refco FX clients left with little in account.
Farrell, Maureen (January 16, 2015).A Brief History of FXCM.
Wilson, Harry (May 4, 2010).Forex broker ODL accepts US takeover.
Greenberg, Michael (May 4, 2010).FXCM acquires ODL Group to form worlds largest Forex broker (Updated). Finance Magnates.
Cowan, Lynn (December 3, 2010).Online Currency Broker Closes Up 6% in Debut.
Crum, Rex (December 2, 2010).FXCM rises 7% following IPO. MarketWatch
Greenberg, Michael (December 2, 2010).FXCM successfully completes IPO, final value $1.05 billion. Finance Magnates
Initial Public Offering, FXCM Inc., Class A Common Stock.
. Securities and Exchange Commission. December 1, 2010
Greenberg, Michael (August 13, 2018).NFA fines FXCM $2 million for slippage malpractices, FXCM will credit clients back. Finance Magnates
NFA levies $2,000,000 monetary sanction against FXCM and orders refunds to customers. National Futures Association. August 12, 2011
Gallu, Joshua (October 3, 2011).FXCM Agrees to Pay $14 Million to Resolve CFTC Slippage Claims. Bloomberg
Kilgore, Tomi (February 8, 2017).FXCMs stock plunge to record low highlights risks to retail currency investors.
Morgan Business Trial Group Files Class Action Lawsuit Against Nations Largest Forex Dealer FXCM. February 10, 2011.
Kahn Swick & Foti, LLC And Former Louisiana Attorney General Announce Investigation Into FXCM, Inc. FXCM. February 16, 2011.
Law Offices of Howard G. Smith Announces Investigation On Behalf of Investors of FXCM Inc(Press release). February 17, 2011.
Kilgore, Tomi (February 8, 2017).FXCMs stock plunge to record low highlights risks to retail currency investors.
Englander, David (November 10, 2012).A Fast-Growing Money Machine.
Szalay, Eva (June 14, 2012).FXCM grabs 50% controlling stake in Lucid Markets.
Greenberg, Michael (June 19, 2012).Credit Suisse teams up with FXCM in launching FastMatch the new ECN forex platform. Finance Magnates
Polansek, Tom (January 9, 2014).Struggling Infinium Capital negotiates to sell assets to FXCM.
High-speed trader Infinium stops trading, winds down.
Schäfer, Daniel; Stafford, Philip (February 26, 2014).Regulator penalises US forex trading group FXCM twice.
Finberg, Ron (February 26, 2014).FXCM UK Announces $16.9 Million Settlement with FCA for Asymmetric Slippage. Finance Magnates
Schaefer, Steve (January 16, 2015).Swiss Franc Stunner Claims Victims, Currency Broker FXCM Bludgeoned.
Demos, Telis; Rexrode, Christina (January 16, 2015).FXCM to Get $300 Million Rescue Package From Jefferies.
FXCM rescue package includes rising interest rate. MarketWatch. January 20, 2015
Udland, Myles (January 28, 2015).Currency Broker FXCM Is Bailing Out Mom And Pop.
Caronna, Michael (January 28, 2015).FXCM to forgive most clients for negative balances on Swiss franc move. CNBC
Jamerson, Joshua (September 1, 2016).FXCM, Leucadia Amend Terms of Rescue Package.
Green, Robert A. (March 1, 2017).Learn Why The NFA Barred FXCM And What It Means For Forex Traders.
Goldstein, Steve (February 6, 2017).FXCM banned by CFTC after taking positions against clients. MarketWatch
Nikolova, Maria (May 8, 2017).FXCM (Global Brokerage) runs into trouble with NASDAQ listing. Finance Feeds
Patterson, Jeff (August 14, 2017).FXCM Closes FastMatch Sale, $66.8m Still Owed to Leucadia. Finance Magnates
Abdel-Qader, Aziz (December 8, 2017).Global Brokerage Applies for Voluntary Delisting from Nasdaq Exchange. Finance Magnates
BRIEF-Global Brokerage, Inc. Receives Approximately 78.5% Yes Votes To Move Forward With The Prepackaged Plan Of Reorganization. Reuters. December 11, 2017
Golovtchenko, Victor (November 11, 2017).Breaking: Global Brokerage Files for Bankruptcy, NASDAQ Delisting Pending. Finance Magnates
Majewski, Sylwester (March 14, 2018).Analysis: FXCM Remains in the Top 5 in 2017. Finance Magnates
Financial services companies of the United States
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This page was last edited on 22 March 2019, at 19:36