Staving off a NYSE Delisiting, FXCM Announces 1-10 Stock Split
- FXCM has announced that they intend to issue a 10:1 reverse stock split to boost their share price to prevent a NYSE delisting.
Stock splits tend to happen when a company’s shares rise and a decision is made to issue new ones to the existing holders to reduce their trading price. The stock split itself doesn’t affect the value of a company, as there is no difference whether a firm has a 1,000 shares valued at $50 or 500 at $100. But, splits are still done to keep share prices more or less in line within ranges of the general market.
Every now and then, a firm undergoes a reverse stock split. In this situation, a company converts multiple shares into one share. Typically, this is only done after a company’s stock price has fallen hard and the firm uses the reverse stock split to boost the trading value of each share. Among the most famous examples was the 2011 1 for 10 reverse split by Citigroup. At the time, shares of Citigroup were trading at $4, and following the reverse split, jumped up above $40. The value of the company remained the same, but by reducing their available float of shares by 90%, the price of Citigroup’s stock inversely rose by 900%.
There are a variety of reasons to apply a reverse stock split to increase the price of a company’s shares. In Citigroup’s case, the bank had finally gotten back on its feet following the global financial crisis of 2008/09 that arguably would have led the firm to be insolvent if it weren’t for government assistance. As such, with Citigroup being able to repay its government loans and reinstating a dividend, they wanted their share price to reflect that of a healthy bank, and not a speculative penny stock.
While reverse splits provide cosmetic benefits to a firm’s image, they are usually also done for operational reasons, such as to avoid a delisting from a major Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. In this regard, after seeing its shares currently languishing below $2 since May and at a current $1.29, embattled broker FXCM has announced that they intend to issue a 10 to 1 reverse stock split. Approved today by FXCM’s board, the stock split will be brought up for shareholder approval in a special meeting on September 21st.
Explaining the decision to apply a reverse stock split, FXCM CEO Drew Niv cited the firm’s goal of continuing to be listed on the New York Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term (NYSE). According to rules of the NYSE, a firm’s shares can be delisted if its price falls below $1.00 for 30 consecutive trading days. While FXCM is currently above that threshold, Niv stated, “The NYSE requires certain standards be met to continue as a listed company on its exchange, and while we currently satisfy all of those obligations and do not anticipate that changing, a reverse stock split will only serve to help strengthen our status and protect the company and its shareholders."
Stock splits tend to happen when a company’s shares rise and a decision is made to issue new ones to the existing holders to reduce their trading price. The stock split itself doesn’t affect the value of a company, as there is no difference whether a firm has a 1,000 shares valued at $50 or 500 at $100. But, splits are still done to keep share prices more or less in line within ranges of the general market.
Every now and then, a firm undergoes a reverse stock split. In this situation, a company converts multiple shares into one share. Typically, this is only done after a company’s stock price has fallen hard and the firm uses the reverse stock split to boost the trading value of each share. Among the most famous examples was the 2011 1 for 10 reverse split by Citigroup. At the time, shares of Citigroup were trading at $4, and following the reverse split, jumped up above $40. The value of the company remained the same, but by reducing their available float of shares by 90%, the price of Citigroup’s stock inversely rose by 900%.
There are a variety of reasons to apply a reverse stock split to increase the price of a company’s shares. In Citigroup’s case, the bank had finally gotten back on its feet following the global financial crisis of 2008/09 that arguably would have led the firm to be insolvent if it weren’t for government assistance. As such, with Citigroup being able to repay its government loans and reinstating a dividend, they wanted their share price to reflect that of a healthy bank, and not a speculative penny stock.
While reverse splits provide cosmetic benefits to a firm’s image, they are usually also done for operational reasons, such as to avoid a delisting from a major Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. In this regard, after seeing its shares currently languishing below $2 since May and at a current $1.29, embattled broker FXCM has announced that they intend to issue a 10 to 1 reverse stock split. Approved today by FXCM’s board, the stock split will be brought up for shareholder approval in a special meeting on September 21st.
Explaining the decision to apply a reverse stock split, FXCM CEO Drew Niv cited the firm’s goal of continuing to be listed on the New York Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term (NYSE). According to rules of the NYSE, a firm’s shares can be delisted if its price falls below $1.00 for 30 consecutive trading days. While FXCM is currently above that threshold, Niv stated, “The NYSE requires certain standards be met to continue as a listed company on its exchange, and while we currently satisfy all of those obligations and do not anticipate that changing, a reverse stock split will only serve to help strengthen our status and protect the company and its shareholders."