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Citi Retail Forex Arm on The Market as Binary Options Face Legal Revolution

FXCM’s remarkable rebound in volumes, Saxo Bank raising capital and the Alpari UK administrators speak up - all in this

The past week has witnessed a number of important development for the online financial trading industry, especially in the binary options market. The U.S. market is opening up again to binary options brokers, this time on regulated exchanges, just as the U.K no longer classifies it as gambling. Other stories on Finance Magnates included FXCM’s remarkable rebound in trading volumes, Saxo Bank raising capital and the missing client funds of Alpari UK Administrators- KPMG.

CitiFX Pro to be sold?

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Last week began with a breaking news by Finance Magnates, which was picked up on various other publications. Various sources has confirmed that CitiFX is seeking to sell its forex retail trading business, CitiFX Pro. The unit is operated as a white label by Saxo Bank, and believed to be worth over 500 million in deposits.

This step could be understood as yet another consequence of the SNB crisis, which has reshaped the forex landscape. Citi itself lost $150 million, and seem to face difficulties in providing competitive prices as liquidity provider for its own retail arm.

CitiFX representatives has stated the Bank “is not commenting on rumors and speculation.” Finance Magnates keeps following the story and will report when a prospective buyer emerges.

 

American Binary Space Heating Up

On Monday, TechFinancials (AIM:TECH), the first publicly listed binary options software developer, announced that it established its position as a preferred software provider for liquidity providers operating in the U.S. binary options market.

This follows a successful first day of trading through Cantor Exchange, the U.S .regulated retail-focused binary options exchange owned by Cantor Fitzgerald, with which TechFinancials is collaborating as an independent software vendor.

Only two days later, we released an interview with Rod Drown, the Senior Managing Director of Cantor Exchange, which shed light on the cooperation between the CFTC designed venue and the retail binary options technology providers.

UK to Change Binary Options’ Legal Status

Across the pond, it was revealed this week that a draft legislation consultation paper recently published by Her Majesty’s Treasury shows that the UK government is set to switch the regulatory framework for binary options trading from gambling to financial trading.

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HM Treasury considers that binary options present similar risks to derivatives, and classifying them as financial instruments would ensure that providers would be subject to specific regulatory requirements in relation to organizational and capital requirements and that the range of investor protection rules in MiFID would apply as well.

It would also mean that the specified binary options are brought within the scope of the market abuse regime.

FXCM Volumes Rebound

According to an announcement made by FXCM on Tuesday, the retail and institutional trading volumes at the NYSE listed brokerage rebounded sharply higher in March. The company reported retail trading metrics for March rebounding 40% to $375 billion, which is 29% higher than a year ago.

On the institutional front, FXCM didn’t fare worse, in fact the rebound in the metrics was even sharper, spiking 53% to $248 billion in March 2015. The figure is 24% higher than a year ago. Average daily volume totaled $11.3 billion in March 2015, which is 40% higher than in February and 19% higher than a year ago.

Saxo €1.25 Billion Valuation

Also on Tuesday, Saxo Bank, the Danish multi-asset brokerage strengthened its capital base by issuing convertible notes and raising equity capital. The Tier 2 Notes which the company sold are valued at €46.25 million ($49.3 million) and the new equity capital raised totals €31.25 million ($33.35 million). The figure represent a major drop in Saxo’s valuation in 2011, when it was closer to $3 billion, according to a Danish media report.

The issues were taken by CarVal Investors, a global alternative investment fund manager with more than $10 billion under management. The valuation deriving from the equity stake taken by CarVal Investors values the Danish multi-asset brokerage at approximately €1.25 billion ($1.33 billion).

KPMG Defend Alpari UK Procedure

Two new documents were released by the KPMG Special Administrators for Alpari UK on Wednesday: an Illustrative Financial Outcome on April 8, 2015 and a Valuation of Swiss currency pair trades.

Missing clients’ funds to be between about $12 to $37 million

The Illustrative Financial Outcome includes a low and high case, showing missing clients’ funds to be between about $12 to $37 million. The Administrators’ time costs from 19 January to 27 March amounted to £3.95m and to date, KPMG have also paid legal fees of $1,282,000.

After a long time during which the special administrators communicated exclusively through their own portal, Finance Magnates spoke with KPMG’s Richard Heis and Samantha Bewick to clarify if there is any room for conspiracy theories and what is taking so long for clients to receive their funds back.

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