Later today, Leucadia National Corporation will be presenting their investor meeting. As part of the meeting, FXCM, which received emergency funding from Leucadia following Swiss franc related losses in January, is providing an operational update. As part of their investment, Leucadia has ownership rights in any potential sale of FXCM. As such, it has become a key investment for Leucadia which potentially provides a windfall of 3x or more throughout the life of the ownership position.
Below is a summary of key details being shared by FXCM, which are updates from previous reports:
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$203 million debt outstanding – as of September 30th, FXCM owes Leucadia $203 million from the $300 million of funding provided to them in January. This is greater than the $195 million figure announced in mid-September. The increase is most likely linked to additional accrued interest since FXCM’s previous update.
Pay back on track for Q1 2016 – after having provided $148 million in payments, with the bulk coming from asset sales, FXCM expects to pay back the balance of their loan to Leucadia during Q1 2016. The debt is expected to be covered from additional asset sales including their minority shares in Fastmatch, majority ownership in Lucid Market and V3 Markets.
Higher revenue capture through CFDs – FXCM stated that their retail volumes are composed of 70% forex and 30% CFDs. After lowering forex spreads and causing revenue capture to fall to $60 per million dollars traded from around $90, FXCM is counting on CFD activity to boost their revenue capture. Specifically, FXCM stated that they are targeting $70 to $80 in revenues per million dollars traded as they expand their CFD offering as well as add more accounts to dealing desk models.