FXCM's Suhail Afzal and Brad Gleason - Ask Me Anything (AMA)
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You raise a good point. Since we are a publicly-traded company (NYSE ticker: FXCM) the details of our loan from Leucadia are well known. In fact, in our most recent quarterly earnings presentation, we clearly outlined how we plan to repay this debt. By contrast, most other forex brokers are privately-held companies, so it's hard to know how much debt they have on their books or the state of their finances.
Over the past few years, FXCM has spent over $250 million dollars making strategic acquisitions building up our non-core businesses, mainly the institutional side as we tried to diversify the firm. We are now looking to sell some of those non-core assets; But, we are not in a rush and are looking to get the highest valuations for these assets.
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We are considering closing or selling smaller regulated entities that require large sums of capital requirements, but that offer increasingly low return on capital. The latter move allows us to free up significant amounts of cash that is currently trapped. We believe that in the near term we can pay down a majority of the loan. That’s our goal.
Despite the events of January 15th and the debit balances that resulted from the Swiss Franc movements, FXCM today remains in a strong competitive position:
$303 million in consolidated operating cash
$1.0 billion in customer equity
195,000 active retail FX accounts
Global regulatory capital of $252 million versus $93 million minimum requirements (an excess of $159 million)
If you have questions about our services at FXCM please send me a Private Message.
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Given what happened with EUR/CHF, the industry is now looking very hard at any potentially similar issues, especially given the increased geopolitical risks in Southern and Eastern Europe. The primary change FXCM has made is to remove currency pairs from our platform that carry significant risk due to over-active manipulation by their respective government either by a floor, ceiling, peg or band. We also raised margin requirements for other pairs as well. Some of these changes will be permanent while others may change as geopolitical risks change.
FXCM believes that No Dealing Desk (NDD) forex execution is the most fair and transparent to provide to traders and will continue to offer it. However, we have received demand for higher leverage (lower margin requirements) particularly from traders in emerging markets where the average account balance is smaller. Offering these traders the choice of a dealing desk option in the future in addition to our existing NDD model will allow us to cater to their demand for higher leverage from a risk management perspective. That said, we still expect the majority of traders to continue to choose our NDD model.
If you have questions about our services at FXCM please send me a Private Message.
A few weeks ago I mentioned our goal is to repay the Leucadia loan by selling certain non-core assets, and today we have announced the first:
FXCM to Sell FXCM Japan to Rakuten Sec for $62 Million
NEW YORK, March 25, 2015 (GLOBE NEWSWIRE) -- FXCM Inc. (NYSE:FXCM) a leading online provider of foreign exchange (FX) trading and related services, today announced that FXCM Holdings, LLC and FXCM Newco, LLC ("FXCM") have signed a definitive agreement to sell FXCM Japan Securities Co., Ltd ("FXCM Japan") to Rakuten Securities, Inc. ("Rakuten Sec"), a top 5 FX broker in Japan, and a subsidiary of Rakuten, Inc. ("Rakuten") (TOKYO:4755), one of the world's largest Internet services companies, for a purchase price of approximately $62 million.
Today we announced another update related to this:
FXCM Pays Additional $54 Million Owed to Leucadia
Avoids Contingent Financing Fee of $30 Million
NEW YORK, April 2, 2015 (GLOBE NEWSWIRE) -- FXCM Inc. (NYSE:FXCM) a leading online provider of foreign exchange (FX) trading and related services, today announced that it has repaid an additional $54 million outstanding under its credit agreement with Leucadia. The payment was funded in part with proceeds from the sale of FXCM Japan. FXCM has now repaid $66 million under the credit agreement, and as of April 1, 2015, FXCM's outstanding Leucadia loan balance is $244 million.
By repaying more than $60 million before April 16, 2015, FXCM has avoided a contingent financing fee of $30 million, and FXCM shareholders stand to benefit from an improved sharing determination of proceeds from future asset sales, dividends and distributions pursuant to the terms of the credit agreement.
"FXCM is pleased with how our debt reduction plan is proceeding," said Drew Niv, CEO of FXCM. "We are ahead of plan and the results of the FXCM Japan sale exceeded our expectations. With all the increased attention to our other properties, we are expecting robust and competitive auctions for the other non-core assets we have targeted to sell."
Below are the CFD holiday trading hours for Easter and ANZAC Day. Forex trading hours remain unchanged, and you can view the holiday rollover interest schedule here: http://bit.ly/14Wwoso
Times below are in GMT
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If you have questions about our services at FXCM please send me a Private Message.
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CFD not being allowed for trading for USA residents
Hi Jason and fellow traders,
can someone please explain the reasoning behind, why CFD's are not allowed and if and when they may become available for we traders in the USA ?
This is kinda on the same playing field, as the current Online Poker situation ...... there are a few sites available, but not the big ones ( PokerStars and Full Tilt ) like it was before the big Black Friday event back in 08 / 09
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