The stories that made the most impact in the forex industry this past week, judging by their popularity with our readers, coverd a variety of issues and involved some of the biggest names in the industry, Forex Capital Markets (NYSE: FXCM), GAIN Capital (NYSE:GCAP), IG Markets (LON:IGG) and Interactive Brokers (NASDAQ: IBKR).
GAIN Capital Purchases City Index for $118 Million
On Friday we broke the story that GAIN Capital Holdings (NYSE:GCAP) has formally entered into an agreement to acquire City Index Limited, an FX, CFD and UK spread betting firm, for $118 million, with a net purchase price of $82 million, including $36 million in cash. The newly combined company will boast a service to 235,000 retail customers across 180 countries with an annual trading volume numbering more than $3 trillion.
Forex Magnates’ sharp readers linked the acquisition in the comments to the ongoing saga of the race between FXCM to take over GAIN Capital and GAIN’s acquisitions every time its stock price is down to deter FXCM.
FXCM to Pay $180,000 Penalty for Unregistered Trades in Canada
In Canada, the securities and derivatives industry is governed locally by provincial or territorial legislation and there is no national regulator. The regulation of FX products differs from province to province and territory to territory, the securities laws requiring a firm in the business of trading in securities to be registered with the respective Canadian provincial regulators.
A provincial financial watchdog has found that although Forex Capital Markets LLC (FXCM US) and Forex Capital Markets Ltd. (FXCM UK) were not registered to sell securities in New Brunswick or Manitoba, they facilitated trades for residents in these provinces. The company agreed to pay an administrative penalty of $180,000 and told Forex Magnates that they are happy to put this matter behind them.
Interactive Brokers’ Customers Most Profitable in Q3 2014
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The Forex Magnates’ Q3 2014 U.S Profitability Report was released on Tuesday and showed an increase in active traders in the country. The quarter also marked improvement for the US retail forex industry. In the latest filings from brokers that compose our Forex Magnates’ US Retail Forex Profitability Report, active accounts in the US grew by 3.4% to 92,729.
During the same period though, customers recorded poorer trading performance in Q2, as on an adjusted weighted average 38% of active accounts were profitable versus 39.5% in the previous quarter, with four out of six brokers recording falling profitability.
Bitcoin Is Back at IG Markets
Showing that times are changing, IG is again bringing binary options for bitcoins back to their platform. IG is now offering bitcoin trading in both Sprint and Ladder binary options. Sprint is IG’s terminology for classic binary options in which customers wager whether prices of an instrument will close higher or lower than the current market prices, with a fixed payout if they are correct.
IG Markets gained the distinction last year of being the first online forex and CFD broker to launch bitcoin trading, when it began to offer bitcoin binary options in April 2013. IG followed up that launch with the distinction of being the first broker to scrap bitcoin trading when they ceased offering the binary options product a month later.
Federal Reserve Ends Quantitative Easing
On Wednesday the US Federal Reserve’s Open Market Committee (FOMC) concluded its latest monetary policy meeting and the result was the widely expected end of the Fed’s bond buying program also dubbed “tapering”. The quantitative easing (QE) effort by the US central bank, targeted at keeping long-term interest rates closer to zero.
While there hasn’t been any indication about the Fed actually resorting to rate hikes any time soon, the bond markets and the US dollar have interpreted the statement as very hawkish. The members of the committee stressed on the labor market recovery issue saying, “A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing.”