StoneX Completes $236 Million GAIN Capital Acquisition Deal
- GAIN has reported strong results for the 2020 first half.
StoneX Group, previously known as INTL FCStone, has announced on Friday the closure of its acquisition of GAIN Capital, a publicly-listed brokerage firm.
The US-based broker and Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. Read this Term first revealed its intention for the acquisition in late February after receiving approval from the board of both the companies. Many GAIN Capital shareholders initially ended up in opposing the deal, but at the end, with a 71 percent shareholders’ approval, the deal went through.
Commenting on this acquisition, GAIN CEO Glenn Stevens said: “As a result of this combination, GAIN’s customers will benefit from a richer product offering, as well as the expanded resources and greater scale of the combined firm. StoneX, in turn, will add a new digital platform to its global financial network, significantly expanding its offering to retail clients, as well as a complementary futures business.”
A major deal in the brokerage industry
StoneX paid $6 per share for GAIN in an all-cash transaction, taking the total deal size at $236 million.
In a recent interview with Finance Magnates, Sean O’Connor, CEO of StoneX, said that the acquisition is beneficial from the financial and strategic standpoint and also strengthens the Group with intellectual assets.
In its quarterly financials, GAIN Capital recently reported that it generated net revenue of $101 million for the 2020 second quarter, down from the $185 million in the previous quarter, but still a solid uptick compared to the $75 million generated in the same time frame the previous year.
“We expect the integration of GAIN’s businesses to drive transaction volumes and create new cross-selling opportunities across all of our platforms – ultimately driving our financial performance in the process,” O’Connor said in a statement.
StoneX Group, previously known as INTL FCStone, has announced on Friday the closure of its acquisition of GAIN Capital, a publicly-listed brokerage firm.
The US-based broker and Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the execution of trades. Consequently, as a third party, the role of the clearing house is to centralize and standardize all of the steps leading up to the settlement of any transaction. Clearing houses are integral in helping reduce the cost, settlement or operational risk of clearing as well as settling multiple transactions across multiple entities.Role of Clearing Houses Across ExchangesFinancial exchanges such as commodities and stock exchanges have relied on clearing houses for over a century. Today, the futures market is often associated with a clearing house, as its financial products are leveraged and necessitate a stable intermediary. Every reputable exchange possesses its own clearing house. This requires all members of an exchange to effectively clear their trades via a clearing house at the terminus of each trading session.Additionally, exchange members are obligated to reconcile clearing house's margin requirements, sufficient to cover the member's debit balance.This is a crucial stopgap to help prevent risk to individual traders. For example, if a trader doesn't meet a margin call, any and all trades will be closed. This is to prevent against any additional losses. This process helps reduce the risk to individual traders, ensuring sufficient funds in the account to cover any losses which may occur. Read this Term first revealed its intention for the acquisition in late February after receiving approval from the board of both the companies. Many GAIN Capital shareholders initially ended up in opposing the deal, but at the end, with a 71 percent shareholders’ approval, the deal went through.
Commenting on this acquisition, GAIN CEO Glenn Stevens said: “As a result of this combination, GAIN’s customers will benefit from a richer product offering, as well as the expanded resources and greater scale of the combined firm. StoneX, in turn, will add a new digital platform to its global financial network, significantly expanding its offering to retail clients, as well as a complementary futures business.”
A major deal in the brokerage industry
StoneX paid $6 per share for GAIN in an all-cash transaction, taking the total deal size at $236 million.
In a recent interview with Finance Magnates, Sean O’Connor, CEO of StoneX, said that the acquisition is beneficial from the financial and strategic standpoint and also strengthens the Group with intellectual assets.
In its quarterly financials, GAIN Capital recently reported that it generated net revenue of $101 million for the 2020 second quarter, down from the $185 million in the previous quarter, but still a solid uptick compared to the $75 million generated in the same time frame the previous year.
“We expect the integration of GAIN’s businesses to drive transaction volumes and create new cross-selling opportunities across all of our platforms – ultimately driving our financial performance in the process,” O’Connor said in a statement.