GAIN Capital Acquires Galvan Research as it Aims to Boost CFD Offering

GAIN Capital has announced today that it is acquiring Galvan Research, a UK based CFD advisory services firm, for an undisclosed sum. In GAIN’s public release about the deal, CEO Glenn Stevens commented that “Galvan Research gives us a solid foundation on which to build a comprehensive advisory service for our clients.” He added that “this transaction is an important step in enhancing our research and advisory capabilities in support of our recently expanded FX & CFD offering, which now covers 12,500 financial products.”

Among stated initiatives of GAIN Capital has been its move to expand its revenue sources beyond its core retail forex offering. As a result, the broker entered futures brokering with its acquisition of Open e Cry in 2012 as well as devote more resources to the firm’s institutional FX offering. In its retail division, FOREX.com, GAIN is also positioning itself away from just being a forex broker, and launched TRADE, a CFD platform at the end of 2012. As such, the current acquisition of Galvan Research follows their existing trend of putting more emphasis on their non-forex retail products. In terms of profitability, CFDs have also been reported by brokers to be responsible for providing wider margins than in forex trading.

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According to terms of the current deal, Galvan Research will continue to operate under its existing brand, but GAIN will begin to integrate the firm’s advisory services to their trading clients. As a UK FCA licensed advisor, Galvan offers trade recommendations, sector reports, and weekly market updates to subscribers. While further details weren’t provided, the FCA advisory license may also provide potential benefits for GAIN in terms of complying with EU regulations applicable to copy trading.

According GAIN Capital, the deal is expected to close this quarter subject to regulatory approval and be accretive to 2014 earnings. Despite the potential boost in earnings, shares of GAIN (GCAP:NYSE) are down 2.4% to $10.09 in early trading today.