Gain acquires CMS Forex's retail business (and Gallant FX's)

Updated: more details on the financial terms of this deal here. As correctly announced by my colleague Francesc on Friday

Updated: more details on the financial terms of this deal here.

As correctly announced by my colleague Francesc on Friday – Gain Capital (aka Forex.com) has acquired the retail forex business of CMS Forex. If you remember, I talked about CMS Forex being acquired by either IG Markets or Gain six months ago, obviously the deal didn’t happen then but it indeed was initially discussed. Three months ago the same rumor resurfaced, this time pointing at Gain, but again the deal didn’t take place.

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I now had a chance to discuss this with Eugen Hawkin, CMS Forex’s President and COO, who confirmed that the deal was finally struck.

Deal terms are not public but Eugene was kind enough to give me a few details:

  • Gain acquires CMS Forex’s retail clients
  • CMS Forex will continue to develop and operate its institutional forex business
  • Gain doesn’t necessarily acquire CMS Forex’s proprietary VT Trader software
  • CMS is likely to downgrade its FDM license to an FCM or IB in the U.S. but intends to keep its foreign registrations in the U.K., Japan and Bermuda.

It doesn’t make a lot of sense to me that Gain isn’t acquiring CMS’s software which is notably superior to its own. I’d assume that Gain is going for both clients and software – something that will surely help its pending IPO.

Another piece of interesting news linked to this deal is that CMS Forex acquired Gallant FX’s retail clients immediately prior to reselling them, along with its own clients, to Gain. Now that’s a quick exit!

Below is the official statements sent by CMS Forex to its clients:

OCTOBER 10, 2010

Dear Trader,

This letter is to notify you that Capital Market Services LLC (“CMS Forex”) will cease providing Foreign Exchange trading services to retail customers, effective October 15, 2010. In an effort to provide the highest quality of service to our existing customers, we have made arrangements to transfer the custody and clearing of your account to GAIN Capital Group, LLC (“FOREX.com”).

With FOREX.com retail traders have access to the global foreign exchange market with the reassurance of trading with a market leader committed to fair and transparent pricing and quality trade execution. Their service also offers professional charting, expert market research and commentary, and advanced trading tools, plus a wealth of education and training. Whatever your level of forex trading experience, FOREX.com has tailored resources to help you make the most of your trading.

CMS Forex has worked closely with FOREX.com to ensure the seamless transfer of your trading account. As a result, no action will be required on your part.

As part of the transfer, you will be assigned a new account number (UserID), your Password will remain the same. Immediately after the transfer, you will receive an email confirming the transfer of your account that will include your new account number and instructions on how to access Forex.com’s various client resources. You will need to go to www.forex.com to access your account.

In order to affect this transfer, open positions will be closed and reopened at the market rate as of 5:00 pm EST on October 15, 2010 at no cost to the client. The transfer itself will not affect the equity of your account. You may continue to trade on your CMS Forex account up to market close on Friday, October 15, 2010. Please note that managed accounts will not have their positions reinstated automatically.

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We strongly encourage you to familiarize yourself with FOREX.com’s trading platforms before the transfer date. Access FOREX.com’s trading platforms.

Please note that pending orders will not be reinstated after the transfer. We encourage you to log into your account to setup new orders at your discretion. Further, micro positions will be rounded down to the nearest ten thousand. (ex. a 47,000 EURUSD BUY position will be converted to a 40,000 EURUSD BUY post transfer, a 4,000 AUDUSD SELL position will be closed out and no position will exist.)

Please also note that in accordance with the new CFTC regulations, your margin settings will be 2% (50:1 leverage) for the major currencies and 5% (20:1 leverage) for all other currencies. Metals will be offered at 100:1. Please see complete leverage notice at the bottom of this email.

The transfer of your account is not required.If you oppose the transfer of your account, please email us at optout@cmsfx.com or call 1 (212) 563-2100 ext. 4600 to notify us of your decision. If you opt out of the transfer and choose to close your account, you have until October 15, 2010 at 5:00 pm EST to close any open positions in your account(s). Alternatively, you authorize CMS to liquidate any remaining open positions at market rate(s) on the transfer date and return any remaining funds in your account(s) to you.

Trading activity in your account after October 15, 2010 will confirm your consent to the FOREX.com Customer Agreement. View FOREX.com’s Customer Agreement.

Should you have any questions about this notice, please review our Frequently Asked Questions or contact our client services team by phone, email or chat:

Click to Chat with a CMS representative (24-hours)

To contact us by phone, please call 1 866 51 CMSFX (1 866 512 6739) or 1 212 563 2100

Information on GAIN Capital Group, LLC (“Forex.com”)

NFA ID: 0339826

Address: Bedminster One, 135 US Highway 202/206, Suite 11, Bedminster, NJ 07921 USA

Customer Service at Forex.com can be reached at info@forex.com or 1-877-FOREXGO (367 3946)

We thank you for being a valued customer of CMS Forex.

Sincerely,

The CMS Forex Team

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