December Review

Not surprisingly, December was a slow month for product launches due to the holiday and end of the year season. Due to the industry professionals taking time off during the month, most new releases were either scheduled for November or pushed back until the beginning of 2013. But, the traditionally slow period didn’t have an impact on M&A activity. If there was a theme for the month it was ‘end of the year’ deals. M&A took place and both the retail, institutional, and exchange level.

The other story during the month was broker reaction to Regulations. On this not, the big news was the exit of GFT Markets from both US and Japan on the heels of the NFA applying a new accounting structure for the firm.

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A list of key headlines:

GFT Exits the US: In a stunning move, GFT announced that it was exiting both the US and Japan. While GFT never made reference to the NFA, according to insiders, the exit was due to the enforcement of dormant accounting rules that had been ignored by the NFA for years. Although the practice was done for years, the NFA decided that it was going to curtail the accounting policy and required GFT to create separate accounts for each jurisdiction. Given a 48 hour ultimatum which GFT didn’t believe it could meet, the broker defensively announced that it was leaving the US rather than have the NFA publically shut them down. With the exit, GFT transferred its US client base to GAIN Capital and its Japanese operation to Planex.

Yahoo Japan Buys CyberAgent FX for $254 million : In what was one of the most interesting deals of the year, Yahoo Japan announced that it is acquiring Japanese broker CyberAgent FX for $254 million. According to Yahoo Japan, the deal is aimed to strengthen their presence in the financial industry as well as supporting their “Yahoo Wallet” business. Yahoo Japan stated CyberAgent FX’s advanced smartphone trading platform and financial know how as reasons for being interested in the broker. Looking ahead, the deal becomes one of the areas to keep an eye on for 2013.

LMAX Sold in Management Buyout valued at £3.6 Million: Gambling concern Betfair announced that it had sold 67% of LMAX Exchange £2.4 Million in an MBO led by LMAX Exchange CEO David Mercer.

IntercontinentalExchange Makes Bid for NYSE Euronext : The story continues for the NYSE as the ICE made a $8.2 billion bid for the company. Beyond the equity trading franchises, the combination of the ICE and Liffe products could become a powerhouse to rival the CME Group’s Globex Platform.

Knight Capital Merges with GETCO : It took a few weeks, but GETCO won the bidding process to acquire Knight. With the deal, the fate of Hotspot FX has been put in the air with numerous analysts expecting the FX ECN venue to be sold along with other non-equity assets.

FXdirekt Shut Down by BaFin : In a regulatory move that no one complained about, German financial regulator BaFin closed down broker FXdirekt Bank due to failing to meet capital requirements. The broker had been the target of lawsuits following claims of scamming clients.

New Binary Options & Forex Broker : While not many new launches occurred, topping the small list was the launch of a new Binary Options brand from Markets.com called TopOption. Also, Andrey Dashin, one of Alpari’s main shareholders announced that he was launching, ForexTime, a new Cypriot broker. The news occurred shortly before Alpari announced that it was closing its Cyprus office, leading many to believe that the branch and employees could be taken over by ForexTime.

Yen Volumes Rise: In one of the more encouraging notes to end year for the industry, numerous brokers and exchanges saw Japanese Yen trading volumes rise as volatility in the currency spiked.

While not a full list, the above headlines encompass many of the important stories and trends of December.