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Deal between FXCM and Infinium Capital: Yes or No?

Leading Forex broker FXCM has just confirmed that it has been talking to Chicago-based Infinium Capital Management LLC about a possible business relationship: and we've been excited to hear of that.  We've already forecast a possible acquisition move by FXCM but we were not sure of a target and now it's named. In this brief article we explore some of the corporate rationale behind an eventual acquisition of Infinium by FXCM. 

 

What is the rationale for FXCM?

 
- For starters, let's mention that Infinium provides a variety of market making and asset management services to institutional clients, hence what FXCM would get would be a boost for its institutional division. Aand the broker could make use of that though its institutional business is strong and the results for July prove that. However, the institutional volumes of Forex.com for the month were higher at $352 billion compared with $185 billion for FXCM.
 
- FXCM has some free cash to spend: when announcing the results for the second quarter, Drew Niv, the chief executive of the broker stressed that the company then had $374 million of cash and that they were undrawn on their $155 million credit facility.
 

What is the rationale for Infinium?

 
- One of the core activities of Infinium is high-speed trading, and the operating environment has been getting tougher for such traders for quite some time. Another high-speed trading firm based in Chicago, Getco LLC, has had severe difficulties (profits plunging, etc.) and at the end of last year it agreed to merge with Knight Capital Group Inc.
 
- Infinium is cutting costs – it reduced headcount in some departments in March 2013. That's a sign of business difficulties.
 
 - Meanwhile, there have been other signs of a restructuring at Infinium – it not only axed jobs but also made some changes in management. Just a couple of weeks ago, Reuters reported that George Hanley, a co-founder of Infinium, would replace Charles Whitman at the helm of the company. Unnamed sources said the appointment was only temporary, indicating that some major swings are looming for Infinium.
 
The situation is very interesting for sure and we'll keep monitoring it.
 

About FXCM Inc.

 
FXCM Inc. (NYSE: FXCM) is a global online provider of foreign exchange (forex) trading and related services to retail and institutional customers world-wide.
 
At the heart of FXCM's client offering is No Dealing Desk forex trading. Clients benefit from FXCM's large network of forex liquidity providers enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. FXCM's U.K. subsidiary, Forex Capital Markets Limited, also offers CFD products with no re-quote trading and allows clients to trade oil, gold, silver and stock indices along with forex on one platform. In addition, FXCM offers educational courses on forex trading and provides free news and market research through DailyFX.com.
TAGS: fxcm  fxcm forex broker  infinium capital management llc  infinium forex  mergers and acquisitions  forex deal  forex deals  algorithmic trading  institutional forex business 

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