Public disaster

FXCM's New Acquisition, Black Monday for Plus500 and More FX Fines

Shares of FXCM near all-time lows, Plus500 has experienced quite a week on the stock market and major banks received

Last week has proven that the foreign exchange industry continues to be full of surprises of all sorts. While the share prices of FXCM continued lower amid a slew of downgrades in the aftermath of the valuation which Leucadia placed on the company, another publicly traded brokerage has taken the center stage.

Plus500 came to the forefront of the stock market movers and shakers last Monday after it stopped processing withdrawals and suspended trading for its UK clients. Speculations about an FCA review of anti-money laundering compliance sent the company’s shares lower by two-thirds. A couple of short sellers have issued warnings on the company’s bottom line and published their analysis on the state of the business model of Plus500.

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While this disaster was in the making, FXCM announced that it had acquired some new business. The U.S. and U.K. accounts of CitiFX Pro will be transferred to the brokerage for an undisclosed sum. Meanwhile, clients of the Singapore arm of CitiFX Pro have been transferred to Saxo Bank.

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The move was widely seen as a surprise for the industry, since both companies were hit hard after the Swiss National Bank (SNB) disaster in January.

Major banks have once again become the focus of media attention after another set of FX fixing fines were announced by the U.S. Department of Justice. The total fines related to foreign exchange fixings manipulation have now exceeded $10 billion and are likely to continue rising.

As the banks’ efforts to rectify their practices are ongoing, a number of smaller regulators such as in the South African Republic are opening their own investigations into the banking conduct, meanwhile class action lawsuits outside of the U.S. are likely to be next in line.

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