Shares of FXCM Inc (NYSE:FXCM) and Interactive Brokers (NASDAQ:IBKR) moved lower in the aftermath of the major news announcements by the companies last night. While the fundamental reasoning for the move of FXCM to execute a reverse split of its shares is largely technical in nature, the usual market sentiment in these situations resulted in increased volume of shares traded.
FXCM Inc’s (NYSE:FXCM) stock dropped by a little over 11.5 percent in today’s trading on the New York Stock Exchange. Trading volumes have been the highest since late May as the company registered a new daily closing low at $1.14 per share. The decision about the reverse stock split is yet to be approved by shareholders of the company at a meeting on September 21st.
The move has been triggered by the exchange listing requirements of the New York Stock Exchange. In the case of FXCM Inc (NYSE:FXCM) it is risking to get its shares valued at below a dollar, which risks the NYSE to take action to delist the firm.
FXCM’s stock will become more difficult to borrow after the number of shares listed for trading is reduced ten-fold
Typically during uncertain times the exchanges have been generous and have given to a number of firms extensions in order to prevent their delisting.
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An additional benefit to the shares of FXCM Inc is that its stock will become more difficult to borrow after the number of shares listed for trading is reduced ten-fold. A secondary effect is that the bid-ask spread of shares of the broker would increase due to the reduced liquidity, which in turn could reduce trading activity and volatility of the company’s stock.
Shares of Interactive Brokers (NASDAQ:IBKR) have dropped more modestly in today’s trading on NASDAQ, primarily due to investors taking profits and some comments by the company’s CEO Thomas Peterffy on the Chinese market, or better said, the lack of reassuring comments according to some commentators.
Since the suspension of a number of stocks traded on the Chinese stock exchanges, investors have expressed concern about the functionality of a market which is heavily tilted by the government.
revenues at Interactive Brokers surprised higher by $44.27 million
Otherwise the solid quarter for Interactive Brokers (NASDAQ:IBKR) has been widely expected by the market with second quarter earnings per share coming in at $0.37, which was in-line with Wall Street expectations. Revenues surprised higher by $44.27 million which nevertheless wasn’t enough to hold investors from taking profits.
Interactive Brokers’ (NASDAQ:IBKR) stock rallied about 100 percent from a year ago, and is still trading over 50 percent higher than in the beginning on the year. The performance of the firm’s shares of during the past three months has also surpassed many industry peers, rising by almost 30 percent.