This past week saw continued interest in the large brokerages left picking up the pieces after the CHF meltdown. Along with tracking major announcements, we were able to bore into and shed light on developments at two of the biggest players in the industry, FXCM and GAIN Capital.
FXCM CEO Reassures Traders While Co-Founder Sells Shares
On Monday we reported that FXCM co-founder, Managing Director and Global Head of Dealing Eduard Yusupov had over a million FXCM shares foreclosed in a margin call in the fallout of the “SNBomb.” Before Black Thursday FXCM shares were valued in the mid-teens; Yusupov’s shares were sold for between $2.41 and $2.29.
Meanwhile it was reported that on December 2014, William Blair and Co., one of the firm’s biggest institutional investors has increased its share in the company to 11.69%.
The most notable news from the NYSE-listed firm came on Wednesday. In his first interview since the crisis, FXCM CEO Drew Niv discussed the company’s future with Forex Magnates and the rationale behind its decisions on and after January 15.
When asked about the emergency loan his company received from Leucadia, for example, the FXCM CEO told Forex Magnates that the company “explored multiple debt and equity financing alternatives in an effort to meet the regulator’s deadline” and that “the deal with Leucadia was the only deal that could and would happen in the very short timeframe [they] were given by the regulators.”
Alpari UK to Be Sold for Parts as Founder Secures Assets
Another major broker levelled by the CHF storm, Alpari UK, is considerably worse off. On Tuesday the group’s special administrator, KPMG, confirmed that it wasn’t successful in selling the company as a whole unit. Alpari UK will now be partitioned into separate assets to be sold separately.
However, the intellectual property and trademarks were purchased by Alpari UK’s main shareholder and founder, Andrey Dashin.
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Dashin is also the chairman of Alpari RU’s board of directors and has labelled the acquisition of the UK branch’s intellectual property portfolio as “one of the first practical steps in realizing Alpari’s plan for global expansion,” spearheaded by the Russian and CIS wing of the Alpari umbrella.
Alpari UK Clients to Apply on New Website for Fund Claims
In other Alpari UK news, KPMG announced one more step toward returning retail clients’ money. According to UK securities laws governing local brokers, all client funds need to be held in segregated bank accounts in case of insolvency. KPMG has given no indication that any of the money is missing and appears to be on track to complete reimbursement.
However, before client money can be reimbursed, the administrators say regulations require that each client agrees to their money entitlement. In order to facilitate this process, KPMG announced that they are developing a website called the “Claims Portal” which will give retail clients access to agree to their claims and provide information that will assist in the distribution process.
Clients have responded to the news with disdain, as it was perceived as an unnecessary expenditure which would only serve to delay the reimbursement. Alpari Japan, for its part, is maintaining its existing system despite the Tokyo operation reportedly being flooded with withdrawal requests.
Is Forex Riskier than Other Assets?
In the wake of SNB’s shock move, GAIN Capital CEO Glenn Stevens shared his thoughts with Forex Magnates. Focusing on the pre-emptive steps the broker has taken, namely increasing the margin requirements for the EUR/CHF pair, he stressed that currencies are not inherently riskier than any other traded asset.
“Only a few players lost the majority of their funds in many instances,” he said. “When you read the press stating how forex is an unsuitable product for the mass market, this is just uneducated and uninformed.”