FXCM to get up to $500/client from Gain Capital deal in US

FXCM to get up to $500/client from Gain Capital deal in US

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Forex brokerage Gain Capital [NYSE:GCAP] will pay either $250 or $500 for each client it acquires from Forex Capital Markets [NASDAQ:FXCM] which is in the process of exiting the US market following regulatory findings. The account transfer agreement refers to substantially all US clients of Forex Capital Markets LLC, a unit of FXCM Inc. The exact amount FXCM will receive depends on the trading activity of client holders for a specified 153-day period, started with the closing date of the Asset Purchase Agreement, which the two brokers entered into on 7 February.

For active clients who execute at least one new trade during the first 76 calendars days of the said period, FXCM will receive $500 per account, while for clients who execute at least one new trade during the period from the 77th day through the 153rd day of the 153-day period, Gain Capital will pay $250 per account.

FXCM’s US clients will be transferred to Gain Capital’s retail forex brand Forex.com. The deal is yet to receive regulatory approval.

FXCM announced earlier this week 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.

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.

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 Group operates via several other subsidiaries, including UK-licensed Forex Capital Markets Ltd. and Australia-regulated FXCM Australia Pty. Ltd. 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 Forex.com 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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