Forex giant Forex Capital Markets (NASDAQ:FXCM), which just announces it is exiting the US, saw its shares plummeting more than 50% to $3.25 apiece at market opening on Tuesday. The broker closed the trading day on Monday at $6.85. This is the lowest value FXCM’s shares have hit in the past 18 months.
The movement is the market’s reaction to the news that Forex Capital Markets LLC, the brokerage’s US arm, has been banned by the US National Futures Association (NFA) and has agreed to withdraw from registration with the US Commodity Futures Trading Commission (CFTC) and never to seek to register with it. The decision, which will become effective later this month, means that FXCM is no longer authorized in the country and cannot provide forex trading services.
FXCM to lay off 18% of employees as result of exiting US
FXCM intends to lay off approximately 150 employees, or some 18% of its global workforce, as a result of terminating its operations in the US, the company said in a filing with the US Securities and Exchange Commission (SEC) published on Tuesday. This is part of a restructuring plan the brokerage will put into practice following the news that it is exiting the US.
“In connection with its withdrawal from business in the United States pursuant to the settlement agreements with the NFA and the CFTC, the Company intends to implement a restructuring plan that includes the termination of approximately 150 employees, which represents approximately 18% of its global workforce. The Company expects to recognize most of these pre-tax restructuring charges in the three months ending March 31, 2017 and potentially in subsequent quarters,” FXCM’s filing read.
Gain Capital’s shares gain momentum on back of expansion news
FXCM is the leading retail forex broker in the US. It is in negotiations with peer Gain Capital to sell its client base, which would make the buyer the new largest market participant. FXCM and Gain Capital have signed a non-binding letter of intent and the client transfer is expected to take place by end-February.
Following the news, Gain Capital’s shares increased more than 12% within the first hour of market opening to $8.59 per share. This is the highest share value reported by the broker in the past year.