Currency provider, FXCM, has reported that it will be offloading some of its non-core businesses in a bid to repay its rescue loan. The broker also reported strong month-to-date trading volumes for the month of January, with record activity over the last five days.
Despite facing a temporary phase of difficulty, the leading forex broker witnessed a sharp rise in trading volumes.
The broker-dealer continues to cross new highs as traders appreciate the heightened volatility in global markets.
The firm reported in a note that through Thursday, January 22, the US-based broker’s month-to-date retail customer trading volume, including all retail FX and CFD volume, was $406 billion* with 30% from the last 5 days alone, which included a US bank holiday. Average retail customer trading volume per day during this period is $27 billion.* In the latter months of 2014, the firm saw record volumes in its retail division with ADV reaching $20 billion, the latest rise highlights the confidence traders have in the listed broker. The firm also reported that as of January 22, tradable accounts were 224,547, and client equity was $1 billion, the firm has seen a slight decline in the number of training accounts, a 2.2% drop MoM.
Drew Niv, CEO of FXCM, commented about the firm’s metrics in a statement: “A week after the unprecedented movement of the Swiss franc, and our financing agreement with Leucadia, FXCM continues to operate in the normal course of business. All of our entities have capital in excess of regulatory requirements. As our month-to-date metrics show, FXCM continues to be a global leader in retail FX with volumes on pace to set a record. We are especially thankful for our customers’ loyalty and support.”
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FXCM, like several brokers, suffered significant losses during the CHF crisis, with the firm reporting a $225 million loss thus putting the firm in financial difficulty. Leucadia holding company negotiated a rescue loan for the firm and gave FXCM a much-needed lifeline of $300 million. FXCM has confirmed earlier reports that it plans to sell non-core assets to repay the financing.
Mr. Niv added: “The financing we received from Leucadia has strengthened our balance sheet and gives us the opportunity to grow our core business while reducing our debt through the sale of non-core assets. We anticipate that the proceeds from these sales and continued earnings, we can meet both near and long-term obligations of our financing, while preserving the strength of our franchise.”
Richard B. Handler, Chief Executive Officer, and Brian P. Friedman, President of Leucadia, commented: “We view FXCM as our next opportunity to work with an investee company to create long-term value for all stakeholders, including FXCM’s dedicated employees and customers. We look forward to assisting Drew Niv and his team to develop the liquidity opportunities to repay last week’s emergency financing and then, as the long-term investors we are, to exercising the patience and diligence needed to maximize the value of FXCM over time as we strive to do for every investment in our portfolio, many of which we have held for the long-term, and, in some cases, for over a decade.”
FXCM’s share price closed at 2.37, 23% down on the day.
*Amount excludes volume generated by clients with negative balances following the Swiss National Bank’s decision to abandon the maximum exchange rate of 1.2 Swiss francs per euro.