Breaking: Global Brokerage Faces Default if Delisted, Looking for Refinancing

Global Brokerage Inc, the company that indirectly owns 37.3 percent of FXCM Group LLC, has announced its Q1 2017 results. The firm reported that its revenues amounted to $45.9 million, which is lower by 22 percent when compared to the same period last year.

The net loss of Global Brokerage for the quarter amounts to $24.5 million, compared to a net income of $61.9 million in the first quarter or 2016. The number includes the changes in derivative gains and liabilities that are associated with the January 2015 deal between FXCM Group LLC and Leucadia National.

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Recently, the brokerage parted with its United States domiciled accounts and lost its authorization to operate in the country. The results of the company’s US operations have been reclassified as “discontinued operations”.

Trading revenue from discontinued operations for Q1 amounted to $12.6 million. The figure is lower by almost 27 percent when compared the quarter that ended on March 31st, 2016.

The net loss attributable to Global Brokerage, Inc. from discontinued operations in the first quarter of 2017 was $5.4 million. Adjusted EBITDA from continuing and discontinued operations in Q1 was $5.6 million, a decline of over 45 percent year-on-year.

Global Brokerage was recently notified by the Nasdaq Stock Market that due to the low market value of the firm, it is facing delisting by October 2017. According to the official announcement supplementing the earnings report, under the terms of the debt arrangements between the firm and Leucadia National, the event could lead to a default.

“We believe that the potential delisting raises substantial doubt about our ability to continue as a going concern. We are working with financial and legal advisers to explore refinancing alternatives,” the company outlines in a statement.

Earlier today, the firm announced in an SEC filing that the company’s long time CEO Drew Niv resigned from his position and is being succeeded by Kenneth Grossman.

Key Performance Indicators

The number of tradable and active accounts declined year-on-year as the company’s clients have been pulling back during a period of low volatility in the first months of 2017. Currency and stock market volatility indices are marking multi-year lows, driving trading volumes materially lower.

Through the first quarter of 2017, the average daily trading volume of retail clients of the company amounted to $10.6 billion. The number is lower by about 26 percent when compared to the same period last year.

On a positive note, the company managed to eke out a gain in the key Revenues Per Million (RPM) metric. The figure increased to $66 per million from $64 per million a year ago. Daily average trades per active account also show a decline from 4.2 in Q1 2016 to 3.3 in the first quarter of this year.