Gain Capital proceeds with US client purchase deal with FXCM

Gain Capital proceeds with US client purchase deal with FXCM

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Forex brokerage Gain Capital [NYSE:GCAP] announced it has decided to proceed with the deal to acquire the US clients of peer Forex Capital Markets (NASDAQ:FXCM), which just announces it is exiting the US. The two entities have entered into a definitive agreement under which FXCM’s retail clients in the US market will be transferred to Gain Capital’s brokerage.

The value of the transaction and other details were not disclosed, except that it is expected to close before the end of February. The transaction is subject to final regulatory approval.
The involved parties have previously stated the costs associated with FXCM’s business operations were not part of their agreement.

“We are excited to welcome customers of FXCM’s US operations to our award-winning service,” said GAIN Capital CEO Glenn Stevens. “They will become part of one of the largest and most well-capitalized providers of retail FX trading services globally.”

As a result of the deal, Gain Capital will become the largest forex broker in the US in terms of customer assets and trading volume. Currently, FXCM is the market leader. For the past quarter of 2016, the average daily volume from customers of FXCM’s US. operations was approximately $2.4 billion.

FXCM just recently announced it is exiting the US market after its local arm Forex Capital Markets LLC got banned by the US National Futures Association (NFA) and agreed to withdraw from registration with the US Commodity Futures Trading Commission (CFTC) and never to seek to register with it. The broker was charged with taking positions against customers, concealing that a key market maker was tightly related to the broker, and misrepresenting its “No Dealing Desk” platform as providing no conflict of interest with customers. In addition, the broker’s principals made false statements to the NFA in regards to these practices. The brokerage neither admitted nor denied the allegations, but nevertheless agreed on a $7 million settlement.

FXCM Group operates via several subsidiaries – US-regulated Forex Capital Markets LLC, UK-licensed Forex Capital Markets Ltd., and Australia-regulated FXCM Australia Pty. Ltd., as well as introducing broker (IB) partners. It is 50.1% majority owned by FXCM Inc. The rest of the group moved to the hands of US lender Leucadia National Corporation in 2016.

Gain Capital operates under the trading brands and City Index for retail clients and GTX for institutional operations. It offers trading in forex, commodities, bonds, indices, and global equities, among others. The broker is regulated in the UK, the US, Australia, Singapore, Shanghai, Dubai, Hong Kong, and Japan.

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