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FXCM Inc Goes Full Circle on Dealing Desk and Leverage

The brokerage has introduced a new dealing desk execution service and up to 1:400 leverage in a new type “mini”

Following months of hardship in the aftermath of the Swiss National Bank (SNB) induced crisis of confidence in the brokerage, FXCM Inc (NYSE:FXCM) has today announced another repayment tranche of its costly loan from Leucadia National (NYSE:LUK). The amount which FXCM has repaid to its lender has totaled to $115 million so far after the sale of its Japanese and Hong Kong units.

As the foreign exchange and CFDs brokerage is selling off its regional subsidiaries, the company is also looking for additional ways to increase its revenue stream. Hence the re-introduction of the firm’s dealing desk execution model when a client is opening an account through the London based subsidiary of the company, FXCM UK. The official introduction to the new account type has been emailed to clients of the firm this morning.

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When FXCM Inc (NYSE:FXCM) started its operations back in the beginning of last decade, the company was largely operating as a market maker. As demand for a new type of product surged, the firm has decided to introduce a non-dealing desk execution model, where the firm was acting as an agent as was profiting only from commissions.

The brokerage went all-in on the non-dealing desk mode of execution last year, when the company made the transition across all of its major subsidiaries.

Due to the large exposure of FXCM Inc (NYSE:FXCM) traders to the Swiss franc, the company suffered over $265 million of losses in the aftermath of the “black swan” on January 15th this year as it failed to recover funds from traders.

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After repaying more than a third of its loan from Leucadia National (NYSE:LUK), the brokerage is looking for new ways to increase its revenue and client base.

The new “mini” account at a glance

Following the lead of its worldwide operations outside of regulated markets, FXCM UK has announced that it is bringing back its 1:400 leverage option for clients. The new type of accounts called “mini” and the company has set a minimum deposit of £50 and leverage on forex is up to 1:400. The account maintains the same maximum leverage on CFDs, which is currently 1:200.

The offering is drastically reducing the amount of pairs which the traders can operate with to 18. While the CFDs numbers remain the same, clients who might prefer to trade somewhat more exotic pairs will be disappointed.

Another limitation of FXCM UK’s “mini” account is the reduced availability of platforms. Traders who choose to use the offering and take advantage of the high leverage and reduced minimum deposits will be limited to MetaTrader 4 and FXCM’s own proprietary platform Trading Station.

As opposed to its non-dealing desk execution model on the “standard” account, the company has brought back the dealing desk and revised spreads to include the total cost of trading. This means that spreads on the new account type is likely to be higher than on the ECN style execution offered with the non-dealing desk account.

FXCM UK is also offering a spread-betting account for UK residents.

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