FxPro Signals IPO Plan is Shelved Amid FCA Crackdown on CFD Brokers

FxPro has stepped up plans for a float early this year after sounding out potential advisers.

Multi-asset retail brokerage FxPro brand, a Cyprus-based and FCA regulated platform, said on Wednesday that it had cancelled plans to list on the London stock exchange, as the UK regulator threatens stricter rules for activities of firms selling CFDs to retail customers, people familiar with the matter told Sky News.

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FxPro has stepped up plans for a float early this year after sounding out potential advisers. The company was working with Credit Suisse and Morgan Stanley over the potential initial public offering, and has been in talks in recent weeks with other firms in London over raising the profile of the broker.

It is understood that FXPro was hoping to follow the listing of its rival CMC Markets, which listed on the London Stock Exchange for nearly $1 billion on 5 February 2016. However, CMC, which saw its market value shedding $260 million, was also concerned by the FCA plan to cap the leverage of customers’ bets, particularly for inexperienced traders.

As Finance Magnates reported in September, the latest Companies House figures for FXPro’s UK-registered entity alone showed a net operating profit after tax totaling £1.1 million ($1.4 million), which compares to last year’s loss of £63,000 ($81,000).

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According to the Sky report, the currency broker has informed a number of prospective non-executive directors that their appointments will no longer take place as the company opts to ‘remain in private hands’. The new board members were to have included Owen O’Donnell, a director of the gaming group Rank.

Meanwhile, the current chairman, Richard Kilsby, a former director of the London Stock Exchange and the online gambling group 888, and will continue in the role “for the foreseeable future”, a source said.

The broker, which began trading in 2007 and is jointly regulated by the UK’s FCA and the Cyprus’ CySEC, is a former sponsor of Fulham and Aston Villa football clubs.

FxPro abandons a planned initial public offering (IPO) and blames Britain’s watchdog which shocked the sector in December 2016 by unveiling a raft of measures to reform CFDs trading. But it’s not alone. Heads of other UK spread betting providers have hit out at the FCA for mishandling its latest clampdown on CFD brokers, claiming that sweeping measures to overhaul the industry could mean shifting headquarters as well as their London-based operations to other countries.

The FCA’s overhaul hit the shares of financial betting giants, with IG Group faring worst after its shares fell 38% to its lowest levels in three years, while sending rivals CMC Markets and Plus500 tumbling.

In his latest public comments, Peter Hetheringon, the CEO of IG, Britain’s biggest player in spread betting sector with a 40 percent share of the market, has criticised the regulator for the turmoil it sparked.

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