The stock price of major forex brokerage FXCM (NASDAQ:FXCM) hit a 52-week low on Friday (30 Dec), its shares closing down at $7.05. The figure represents a drop by more than 55%, compared to a year earlier – on Jan 4, 2016 the broker’s stock traded for $15.77 apiece.
Throughout the last trading day of 2016, a total of 53 569 FXCM shares changed hands, leaving the company with a market capitalization of $39.5 million – in fact, one of the lowest among publicly listed forex brokers.
In comparison, the broker’s main peer, Gain Capital (NYSE: GCAP), registered a 13.5% drop in its stock price in 2016: its shares traded for $6.58 a piece at market close on December, 30, while on January 4, its price was $7.61. Gain Capital operates the famous Forex.com brand, designed for retail clients.
Indeed, 2016 was a tough year for FXCM – mainly due to the fact that the broker has an unfavorable debt to Leucadia National Corp. The brokerage drew a $300 million loan from the lender to cover clients' losses and meet the minimum capital requirements ($20 million) after the Swiss franc spike in January 2015. In order to repay this debt (with high punitive rate of interest), FXCM had to sell two of its subsidiaries - FXCM Japan Securities and FXCM Asia (aka FXCM Hong Kong) - to Japanese company Rakuten Securities. In October, it also sold its news and research portal DailyFX to IG Group (LON:IGG) for $40 million and more than half of the debt to Leucadia is repaid.
Despite the financial difficulties it is experiencing, FXCM has retained its leading position on the US market in terms of both retail trading volumes and client deposits. Besides, in November the FXCM Group announced it is expanding to South Africa - a market with huge potential.
Currently, the FXCM Group is 50.1% majority owned by FXCM Inc. The rest of the group moved to the hands of Leucadia National Corporation as part of an agreement the two companies signed to amend the conditions of their credit letter agreements.
Forex Capital Markets is one of the few brokers who still operate in the US. It is a registered Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) with the US Commodity Futures Trading Commission (CFTC). It has units registered and regulated with the relevant authorities in the US, the UK, Australia, and France. The broker offers forex, CFDs, and spread betting services.