FCA Approves INTL FCStone's Consolidation of its Foreign Exchange and Execution Business

Tuesday, 25/03/2014 | 13:30 GMT by Steven Hatzakis

The publicly traded broker operating in multiple markets including FX, has received regulatory approval in the U.K., to merge its INTL Global Currencies Entity (IGC) with its full-scope regulated dealing business IFL.

Regulatory approval has been granted for INTL FCStone to merge two of its subsidiaries in the UK, according to an official announcement the company put out today. The entities to be consolidated include its foreign exchange payments business along with its full scope investment services firm that provides execution and clearing related services.

The green light comes from the UK’s Financial Conduct Authority (FCA) which provides the company the okay to consolidate its two UK subsidiaries, INTL FCStone Ltd (IFL) and INTL Global Currencies Ltd (IGC), as per the description in the press release.

The company has recently reported positive metrics for its prior quarter, as covered by Forex Magnates last month, and according to it latest annual report for 2013 has nearly 1,100 staff employed across 11 countries, and nearly $2.8 billion in total assets, and more than 20,000 accounts representing approximately 11,000 separate customers, located in more than 100 countries.

Philip Smith, Chief Executive Europe, Middle East and Africa (EMEA), INTL FCStone

Philip Smith, Chief Executive Europe, Middle East and Africa, said, "Following a record quarter, INTL FCStone's UK-based businesses are growing at a very encouraging rate. The next stage of consolidation during 2014 will be to incorporate our global precious metals businesses currently operating through our various international offices. Last year we transacted in more than 300 tons of physical precious metals and consider ourselves to be one of the largest importers of precious metals into the Indian sub-continent."

The firm's Foreign Exchange business which involves several of its entities, including the IGC business was announced as part of the consolidation. This business line, under the IGC name, is involved with the firm's institutional cross border global Payments business, and processes 200,000 payments annually, with volumes totaling $16 billion across 145 currencies, according to the press release. IGC services many of the humanitarian branches of supranational organizations, governmental aid agencies and household names within the NGO and charity sectors, and also services international corporations and an increasingly large section of the international banking community.

INTL FCStone proudly says that many of the world's largest banking institutions have recognized the advantages of making their payments through a specialist service provider and have chosen the services of IGC for exotic currency delivery for the significant benefit of their clients. The company has won the Forex Magnates's industry award for best Liquidity provider in 2012, reflective of the seriousness of its FX offering, which includes among other capabilities, related foreign exchange services on the institutional side.

IGC provides the knowledge and infrastructure framework upon which such banks rely to deliver payments for their clients and prides itself on its ability to make payments to almost every conceivable country, in local currency.

The other business being consolidated into the IGC segment is INTL FCStone Ltd [IFL],the group's full scope investment firm, providing advisory, execution and clearing services to commercial clients who wish to mitigate their price exposure to FX, metals, energy and soft commodities. IFL is a category 1 ring dealing member of the London Metal Exchange, a full clearing member of ICE Clear Europe, CMECE and LCH EnClear, and offers clearing services on a host of global exchanges through group affiliates, as per the explanation in the announcement today.

It appears the consolidation could have a streamlining effect, by merging the two to create a combined synergy, where the foreign exchange related payments business is now merged into the firm's full-service dealing business, including its clearing related services.

Source: INTLFCStone Investor Relations Website

The company's share price, as can be seen traded on the NASDAQ stock exchange, has nearly recovered from the abrupt fall that occurred last December when the company self-reported an accounting error related to a historical business it had acquired.