FXCM has just announced that its fully owned subsidiary FXCM Japan has agreed to acquire another Japanese broker named Foreland Forex (http://www.foreland.co.jp/). Details of the transaction were not disclosed at this point but we show see more in the next FXCM’s quarterly report. As seen in the latest Forex Magnates Quarterly Report, Japan is by far the largest and most active retail forex market in the world with Japanese retail forex brokers responsible for 47% of the global retail forex volume.
This is FXCM’s second Japanese acquisition after it acquired its Japanese franchise GCI just 3 months ago. FXCM paid for GCI, which had 17,000 accounts and $110 million in equity, just $5 million. Foreland has almost double the equity on similar number of accounts and therefore we can estimate that the price was a little over $10-12 million (FXCM paid relatively less for GCI due to its franchise relationship). Apparently Japan is no less lucrative now than it was before the leverage reductions of the last two Augusts and many Western brokers are keen to enter this market (OANDA, Alpari, AVA Forex and others). For American brokers, even the bigger ones like FXCM, who either lose money or don’t make much in their US subsidiaries the only way to grow and offset these huge expenses is through foreign acquisitions and growth of non-American clients base.
NEW YORK, NY – September 14, 2011 –FXCM Inc. (NYSE: FXCM), a leading online provider of foreign exchange, (“FX”), trading and related services worldwide, today announced that its subsidiary FXCM Japan Securities Co., Ltd. (“FXCM Japan”) has agreed on terms to acquire Japanese FX broker Foreland Forex Co., Ltd. (“Foreland”), subject to certain adjustments. The agreement is subject to final documentation and is anticipated to be completed in the first half of October.
Foreland is one of the oldest and most established Japanese FX brokers, offering retail FX trading since 2001. They have established a reputation for offering attractive swap points, competitive spreads, and aiming to expand a customer’s trading life by offering market commentary and analysis, education and trading tools. As of September 1, 2011 Foreland had over 18,500 tradable accounts* with client equity of over $190 million. When combined with FXCM Japan’s over 25,700 tradable accounts* and over $159 million in client equity, the result is one of the largest retail FX brokers in Japan.
Commenting on the acquisition, Drew Niv, CEO of FXCM, said “FXCM Japan is gaining critical mass in Japan, the world’s largest retail FX market, and a region we continue to be bullish on.” The proposed transaction, Niv added, “is another example of our disciplined acquisition approach. After closing, we look to see immediate payoff from growth in client equity and increased brand recognition in Japan.” Niv continued, “This merger positions FXCM Japan to be one of the largest retail FX brokers in the Japanese market, where we continue to grow in size, but more importantly continue to strive to bring the top product to Japanese traders.” Adding, “Foreland targeted a very different customer base than we normally do and this adds worth to the acquisition because it diversifies our holdings.”
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As with FXCM’s acquisition earlier this year of the retail FX business of GCI Capital, FXCM believes this deal was attractive from a value standpoint. With the completion of major regulatory changes, FXCM believes that the Japanese market is particularly attractive with large numbers of retail FX clients who maintain longer relationships with their brokers than other global markets.
FXCM Japan offers clients the benefit of FXCM’s large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs on our flagship and award winning platform FXCM Trading Station. Clients are be able to trade oil, gold, silver and stock indices along with forex. Additional advantages include mobile trading, one-click order execution and trading from real-time charts. FXCM offers clients the ability to place stops and limits freely and allow traders to customize them for every ticket. FXCM supplies over 600 custom indicators and permits clients the ability to build their own.
About FXCM Inc.
FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers worldwide.
At the heart of FXCM’s client offering is No Dealing Desk forex trading. Clients benefit from FXCM’s large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution, and trading from real-time charts. FXCM’s UK subsidiary, Forex Capital Markets Limited, also offers CFD products with no re-quote trading and allows clients to trade forex, oil, gold, silver, and stock indices on one platform. In addition, FXCM offers educational courses on forex trading and provides free news and market research through DailyFX.com.