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FXCM has $155 million left to repay to Leucadia

After having made payments in the amount of $238 million to Leucadia National Corp., Forex Capital Markets (FXCM) has $155 million left to repay to its US lender, Leucadia National Corp. (in the form of principal, interest and fees, according to a shareholders’ letter issued by the bank).

 

Furthermore, the lender expects to receive up to 65% of future FXCM cash distributions after principal and interest are fully repaid.

 

We remind you that the brokerage drew a $300 million loan from Leucadia to cover clients' losses and meet the minimum capital requirements after the Swiss franc spike in January 2015.

 

Earlier this month it became clear that the largest US forex broker FXCM got in trouble with the US regulators and subsequently withdrew from the US forex market. In relation to this, it sold its US customer base to peer Gain Capital with approximately $142 million in assets.  The proceeds from the account sale and the release of capital will also serve for repaying of the loan.

 

Besides, the US arm of FXCM announced the resignations of William Ahdout as a Director on the Company's Board of Directors and Drew Niv, as Director and Chairman of the Board and Chief Executive Officer. It also decided to change its name to Global Brokerage.

 

While we are disappointed that these events from a number of years ago (prior to our investment) could not be resolved in a more favorable manner, we believe that, with its new leadership, the cost savings that will be realized when FXCM withdraws from serving customers in the US and the vigor of FXCM’s global businesses, FXCM remains well positioned to continue to recover from past events, to grow its platform, to raise profits and margins and to increase all stakeholders’ value,” Leucadia commented on the matter.

 

Even without its US customers, FXCM remains one of the largest retail forex brokers worldwide, and expects continued profitability and global growth. The brokerage now operates via several other subsidiaries, including UK-licensed Forex Capital Markets Ltd. and Australia-regulated FXCM Australia Pty. Ltd. It is 50.1% majority owned by FXCM Inc. The rest of the group moved to the hands of US lender Leucadia National Corporation in 2016.

TAGS: FXCM  US  Leukadia loan  regulation  forex brokers 

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