FXCM Said to Be in Talks With Jefferies for $200 Million Rescue | Forex Factory

  • FXCM Said to Be in Talks With Jefferies for $200 Million Rescue

    From bloomberg.com

    FXCM Inc. (FXCM), the largest U.S. retail foreign-exchange brokerage, is in talks to raise about $200 million from Jefferies, people with knowledge of the matter said. The people asked not to be identified discussing private information. The company, which handled a record $1.4 trillion of trades by individuals last quarter, said earlier that clients owe $225 million on their accounts after the Swiss National Bank’s decision to abandon the franc’s cap against the euro roiled markets worldwide. “Clients experienced significant losses” after the franc surged, FXCM said in a statement dated Jan. 15. The ... (full story)

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Ill-b-back
Jan 16, 2015 12:41pm
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Quoting redfx1989
most big broker is market maker, and also dont forget fxcm is liquiditor too.

just figure it,

in normal day, house A selling egg, fxcm accept that egg, and house B buying egg,
remember fxcm in midle as liquiditor.. so when you need egg or money, fxcm will do that,, they always made profit, because price different called BID and ASK, a.k.a spread, because 1 house have egg, anothers house need egg

but 1 day, egg central bank saying something,, house A, house B, house C and so on, selling egg, and no house willing to buy egg.

all egg...
egg on their face, lots of egg
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wyley187
Jan 16, 2015 5:16pm
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Quoting ZebraSquirl
I requested a withdrawal of my entire balance this morning, prior to this news. Naturally, this is a positive development for FXCM, but they are operating on such a thin profit margin that it will be virtually impossible for them to pay this back within 2 years. Quarterly reports filed with the SEC indicate that their net profits for the last four reported quarters is less than $5 million; the $225 million figure cited represents around two quarters worth of gross revenues. It would take FXCM more than 40 years to pay back the loan, even if...
I have done the same thing Zebra and agree with you 100%, I'm looking at citiFX, unfortunately I could not get anybody via phone, I'm assuming their customer support for new accts closes when the market does?...other than Citi, I have no idea where else to be looking, I do know that I will be reading companies terms for client funds in case of bankruptcy ALOT closer now. This is how I make my living and this was a serious wakeup call for me. I have an acct with Oanda as well so I'm somewhat diversified.
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ZebraSquirl
Jan 16, 2015 4:54pm
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I requested a withdrawal of my entire balance this morning, prior to this news. Naturally, this is a positive development for FXCM, but they are operating on such a thin profit margin that it will be virtually impossible for them to pay this back within 2 years. Quarterly reports filed with the SEC indicate that their net profits for the last four reported quarters is less than $5 million; the $225 million figure cited represents around two quarters worth of gross revenues. It would take FXCM more than 40 years to pay back the loan, even if there was no interest ... . It is possible that they can recover some (most likely, a fraction) of the negative margin balance, but this is likely to be a protracted legal process involving collections from virtually hundreds, if not thousands of clients who are in various states, countries, and jurisdictions.

Moreover, a good chunk of this change is probably intended to restore FXCM's compliance with SEC regulations regarding the holding of sufficient capital to repay clients upon request and cannot be used for continuing operations costs.

Additionally, FXCM has lost not only the negative equity balance client base, but other clients as well in the process who are seeing other brokers caught up in this mess fall by the wayside and suddenly shut down operations. No one wants to have money with a broker who is potentially on the brink and has backed themselves into a corner from which they cannot successfully emerge. I think FXCM has done just that ... .

Off to research other brokers ... .
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ZebraSquirl
Jan 16, 2015 5:35pm
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Quoting wyley187
I have done the same thing Zebra and agree with you 100%, I'm looking at citiFX, unfortunately I could not get anybody via phone, I'm assuming their customer support for new accts closes when the market does?...other than Citi, I have no idea where else to be looking, I do know that I will be reading companies terms for client funds in case of bankruptcy ALOT closer now. This is how I make my living and this was a serious wakeup call for me. I have an acct with Oanda as well so I'm somewhat diversified.
I'm also checking out ETrade, which has an Fx unit.
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ycomp
Jan 16, 2015 11:06am
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Sorry but your comment makes no sense. .. When such super extreme moves occurs in seconds it's precisely and only because there is no liquidity. Sure the account can be closed as soon as a margin call occurs, but at a large negative balance... tradeable price was probably never exactly anywhere near the point required to close the account at zero. whether or not the client owes them money I guess depends on their policies but counterparties still must be paid.for anyone unfamiliar with price moves just look at any sizeable weekend gap on charts. It's not exactly the same thing but it illustrates what price can do.
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brucewhain
Jan 16, 2015 1:55pm
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FXCM has been pressing their luck. According to my understanding they are the direct descendants of REFCO, of the famous 2004 scandal. They have attempted to cartelize the retail forex industry, taking advantage of customers' disenchantment resulting from the Dodd-Frank trading restrictions to buy out large, reputable brokers and their American and overseas MT4 clients. My broker - which over ten years NEVER had any regulatory run-ins with ANYONE - implemented "First-In-First-Out" on August 3. I closed the account August 4. (I could tolerate the hedging restriction and 50-to-1 leverage but not FIFO.) Shortly after that their website went dark and it was announced FXCM had bought their MT4 accounts, in both the US and Australia - where regulations in restraint of free trade designed to ruin the retail forex industry have not (yet) taken hold.

According to Forex Magnates, FXCM has taken possession of the holding company which owns the copyright to MT4 - <b>the largest store of open source trading software ever assembled.<b/> No doubt they had hoped to become the darlings of competing retail trading entities and their corrupt government cronies who first sought to destroy retail forex (and have largely succeeded here in the US) through means of the Dodd-Frank restrictions. Cartelizing forex, and the main store of free trading software which has allowed advancement for countless thousands of retail traders who would otherwise not have had a chance, deserves a major rethink. Entities and regulations operating in restraint of free trade, and restrictions on open source sharing, are illegal.
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redfx1989
Jan 16, 2015 11:53am
Permalink
most big broker is market maker, and also dont forget fxcm is liquiditor too.

just figure it,

in normal day, house A selling egg, fxcm accept that egg, and house B buying egg,
remember fxcm in midle as liquiditor.. so when you need egg or money, fxcm will do that,, they always made profit, because price different called BID and ASK, a.k.a spread, because 1 house have egg, anothers house need egg

but 1 day, egg central bank saying something,, house A, house B, house C and so on, selling egg, and no house willing to buy egg.

all egg go to fxcm ware house, and all house need money, and fxcm only have egg, alot of egg,,
Reply
Philforex
Jan 16, 2015 11:10am
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I'm not sure about this ....I understand most of brokers where unable to close the Customers accounts hitting the margin limit just because of the sudden massive spread and lack of liquidity...is that correct ?
The main thing I still do not understand is why some lost more than others ?
Reply
Philforex
Jan 16, 2015 1:06pm
Permalink
Quoting redfx1989
most big broker is market maker, and also dont forget fxcm is liquiditor too.

just figure it,

in normal day, house A selling egg, fxcm accept that egg, and house B buying egg,
remember fxcm in midle as liquiditor.. so when you need egg or money, fxcm will do that,, they always made profit, because price different called BID and ASK, a.k.a spread, because 1 house have egg, anothers house need egg

but 1 day, egg central bank saying something,, house A, house B, house C and so on, selling egg, and no house willing to buy egg.

all egg...
Thanks for the explanation. So I follow your road then Dukascopy should also lose a lot of money.
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Philforex
Jan 16, 2015 1:14pm
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Quoting Philforex
Thanks for the explanation. So I follow your road then Dukascopy should also lose a lot of money.
Apparently they were much more prepared for that crash...
http://leaprate.com/2015/01/dukascopy-confirms-business-as-usual-safely-passing-through-the-chf-dramatic-price-shift/
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euannaude
Jan 16, 2015 10:57am
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How would the clients owe them any money ....as soon as they hit margin call the account would have closed out. Any trader with a negative balance would still have enough funds to cover this ...other wise the account would have been closed along with all the open trades .....or am I missing something here ....for me FXCM is a shady operation and in my humble opinion this is just another example of what I feel ....
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usdoutlaw
Jan 16, 2015 11:49am
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LOL FXCM has always been a mess. But i do like their free charts!

As for going after client's for neg bal money, good luck with that! Legal costs and a terrible rep will shut you down before recovering any of it so why bother?
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redfx1989
Jan 16, 2015 12:55pm
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Quoting Ill-b-back
egg on their face, lots of egg
hahaaaa loll
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Ranmalpg
Jan 16, 2015 10:28pm
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I too have had several bad experiences with FXCM! I have been trading for a little over an year now and with 3 brokers, Hot Forex, FXCM and CTM (Capital Trust Markets) and last year for the April NFP, i placed two IDENTICAL trades (GBP/JPY pending SELL trades) with both HF and FXCM (same entry price, TP etc) Both trades were placed as pending trades and placed about 3 hours before the NFP release.
5 minutes after the news release my trade on HF (Hot Forex) was executed Perfectly giving me a profit of $451.84 When I checked up on my FXCM platform i was shocked to find that the trade had NOT EVEN BEEN EXECUTED!!!
When i spoke to a 'Chat' person online he said that "due to the high volatility there was not enough liquidity to execute the trade!" (funny how they never mention those 'minor details' on their advertisements / propaganda material - after all FOREX has many 'high volatility' news events almost every day and if a client cannot expect their broker to execute trades for them at those times, what is the use?)
I was both amused and angry and told him that the IDENTICAL trade was executed on HF and i made a profit of $451.84 to which his (high & mighty)response was that HF are a DD (dealing desk) and that FXCM were ECN brokers!
Anyways i was asked to refer the 'case' to 'FXCM Audit' for a formal response which was (after 10 days and many more time wasting emails from me) that there was no fault on their part!!!
Basically, FXCM has been screwing small retail clients like me for a while - A few years back they were sued for 'SLIPPAGE'!!
If FXCM really lost a quarter of a Mil on black Thursday, i think that would be POETIC JUSTICE for all the small retail clients they have screwed!! .....but they are such diabolical con artists... so personally i would'nt believe a word they say!!
If anybody wants to invest with FXCM -think twice!! i can provide ALL the PROOF -including SCREEN SHOTS of the non executed trades (but executed by other brokers), emails, 'chats' and FXCM's responses!!
However, thus far (thankfully) both my other brokers - Hot Forex and Capital Trust Markets have been EXCELLENT in terms of execution, honesty and integrity!!
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Trader#1FCE
Jan 16, 2015 2:55pm
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this is such a mess. i have 35k with fxcm. is there a chance i will get it back?
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Trader#0000
Jan 16, 2015 4:51pm
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FXCM is bailed out!

http://www.forexfactory.com/news.php?do=news&id=522103
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