Forex Magnates has learned that some larger and well capitalized brokers are out making calls today about acquiring outright or purchasing a share of customer books to provide capital to struggling brokers. The news follows revelations that FXCM is facing a balance sheet crunch of $225 million as customer accounts went negative after yesterday’s Swiss franc move. In addition, scores of brokers have announced other losses with AlpariUK and Excel Markets being forced to shut down.
Among the brokers include larger market-making firms, which were less exposed to violent moves of the franc. Names include IG Markets, which itself suffered up to a £30 million loss but is well capitalized to absorb the hit, OANDA, Markets.com, GAIN Capital, AVAFX and yet to launch, Invest.com. In relation to GAIN Capital, the broker made their desire for acquisitions apparent in a statement today when CEO Glenn Stevens said, “Following the events of January 15, 2015, we remain well capitalized, financially sound and well positioned to grow market share and, as one of the industry’s leading consolidators, take advantage of the strategic acquisition opportunities that will result from yesterday’s events.”
The arrival of buyers come as many brokers who lost money are in need of immediate capital to remain above their capital requirement minimums with regulators. As a result, the desire for immediate funds may have created a buyer’s market, in which they are looking for ‘groyse metsia’ (large bargain for those not from New York).
Deloitte’s Banking Report Forecasts the Future of Social DistancingGo to article >>
The current situation is reminiscent of flash crash glitch for Knight Trading which resulted in a $400 million loss and put their future in peril. Similar to that situation, brokers at peril of breach with regulators or having their liquidity cut by banks, may be receiving a lifeline until the close of trading today to source additional capital over the weekend, or face closure.
One candidate who appears to be looking to expand is GKFX – according to an exclusive statement to Forex Magnates from GKFX, “in light of recent events, following the actions of the Swiss National Bank, GKFX Financial Services Ltd is exploring the possibility of acquiring several brokers who have unfortunately suffered financially.”
“GKFX is planning on capitalising on its strong balance sheet, global reach, and extensive product offering. GKFX’s growth continues to outperform the industry, quadrupling in size over the last 2 years and increasing volumes by tenfold. They have invested in excess of $25M in IT and operational capabilities over the last year and GKFX is in a very strong position to expand its business yet further.”
Forex Magnates has been informed that Gallant Capital Markets has also benefited during the crisis-period, in an emailed statement to the firm, it states: “acquisitions are a “primary focus” in the short-term.” The firm also stated that it experienced record single-day trading volumes on the 15th of January.