The management agreement between FXCM and Global Brokerage – the firm that rose from the ashes of FXCM’s US operation when it was banned earlier this year, has been formally ended.
In an announcement today, the firms say the termination was mutually agreed by the two parties and “reflects the continuing separation of FXCM from Global Brokerage”.
Following the banning of FXCM in the US for concealing its relationship with its number one liquidity provider, which the US Commodity Futures trading Commission (CFTC) considered a violation of the Commodity Exchange Act and CFTC regulations, the firm sold most of its customer accounts in the US to Gain Capital.
In addition, however, it also changed its name in the US to Global Brokerage, which continued to operate and retained some original FXCM clients, however the re-branded firm has faced problems over its market capitalisation. In August rumours swept the market that Global Brokerage would be delisted from the Nasdaq exchange due to low capitalisation and low trading volumes.
At that time, FXCM – which has continued to operate elsewhere in the world – sought to distance itself from its offspring, issuing a statement saying, “[Global Brokerage] is a shareholder of FXCM with 50.1% equity ownership and a minority economic interest. More importantly, FXCM has no responsibility or obligation for [Global Brokerage’s] debt or other obligations. Accordingly, the recent news and any adverse developments at [Global Brokerage] have no impact on FXCM or its ability to service its customers.”
Speaking of today’s announcement, Brendan Callan, CEO of FXCM, says, “We are extremely pleased to have taken this step. I believe that operating on a standalone basis is better for the firm, our stakeholders and most importantly our clients.”