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FXCM

Capitolis Goes Live with FX Credit Service

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Capitolis has gone live with a foreign exchange credit switching service, Capitolis Switch.

In a release issued today, Capitolis says that its mission is to address capital markets constraints in the financial system and claims that, with the launch of Capitolis Switch, a key credit issue is addressed. The firm says that this service will enable the unbundling of execution, processing, capital and risk in FX prime broking (FXPB).

Capitolis says it is working with Citi, Jefferies and FXCM in launching this new service.

Updated Story: Lucid Markets Shuts Down

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Market sources tell Profit & Loss that Lucid Markets has sent out a communication to all clients stating it is closing its business effective immediately.
The firm, which is majority owned by FXCM, which holds a 50.1% stake through its UK arm, is a electronic market maker in FX.
Although there is surprise at the suddenness of the announcement and the immediate closure, Lucid has been, according to its latest filing in mid-2017, “actively marketed for sale” by FXCM as the latter continues to divest itself of assets following its rescue by Leucadia in early 2015.

Spot the Difference: Defining “Prime-of-Prime”

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“Prime-of-Prime” has become something of an umbrella term these days, used by many firms operating very different business models. So Profit & Loss asked a number of firms that place themselves in this category exactly what constitutes a “true” prime-of-prime service provider.

FXCM Steps Further Away from Global Brokerage

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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, 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 for concealing its relationship with its number one liquidity provider, FXCM sold most of its customer accounts in the US to Gain Capital and re-branded.

Euronext Closes FastMatch Deal

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Euronext has completed the acquisition of 90% of FastMatch, after having received regulatory and anti-trust approvals.

This follows the announcement of 23 May 2017 on the signing of the agreement with the existing shareholders of FastMatch.

In a release issued today, Euronext says that the acquisition is part of its “Agility for Growth” strategy, and that it will diversify Euronext’s top line, accelerate its growth profile and allow the group to extend its “best execution” value proposition to an additional asset class.

Questions, Questions, Questions

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FXCM has known its share of controversy in recent years and now the firm has been barred from operating in the US. Profit and Loss staff report on an issue that has triggered another round of introspection in the FX industry.

Just over two years after staving off bankruptcy due to losses resulting from the Swiss National Bank’s decision to unpeg the Swiss franc, FXCM has been forced to withdraw from operating in the US, changed its name and seen its two principals step down from the business.

The unravelling of FXCM has impacted across the FX industry with questions being asked around the effectiveness of self-regulation, how the Global Code of Conduct could deal with a repeat offence, and how the industry moves forward in an atmosphere of mistrust?

Last Men Standing

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FXCM’s forced exit from the US leaves only two major retail OTC FX-focused brokerages in the market. Galen Stops talks to the CEOs of these firms about what this means for the industry.

“The retail foreign exchange market has suffered a less than exemplary reputation for some time now,” concedes Vatsa Narasimha, CEO of Oanda.

The latest blow to the industry’s reputation comes as the US Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) concluded that FXCM had defrauded its US customers, ordering it to withdraw from doing business in the country and fining the firm and its founding partners a total of $7 million.

FXCM: The Other Side of the Story

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The FX industry has, by and large, been swift and united in its condemnation of the actions of FXCM, for which the firm was banned from the US and fined $7 million for defrauding FX customers.

But, as they say, there are always two sides to every story and so Profit & Loss has been talking to various market sources that provide different perspectives on this case. This is challenging because as part of the legal agreements between FXCM and the Commodity Futures Trading Commission (CFTC), the firm neither denied nor admitted the allegations against it, and therefore cannot speak to the press about the issue.

FXCM Changes Name, Leadership Following US Scandal

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FXCM is changing its name and its leadership following the recent scandal which saw the firm and its co-founders, William Ahdout and Drew Niv, fined $7 million and the firm banned from operating in the US.

In response to this, the company has changed its name to Global Brokerage, Inc. and the trading ticker symbol will change to “GLBR” expected to be effective at the opening of trading on February 27, 2017.

Niv has submitted his resignation to FXCM from his positions serving as a director and chairman of the board, effective immediately. He is also resigning as CEO, but will remain at the company in an advisory role “to assure an orderly transition”, says FXCM in a statement issued today.

And Another Thing…

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Last week’s diatribe following the FXCM fine and banning in the US triggered a fair amount of feedback – thankfully all of it supportive – and I think it is fair to say that the consensus is that if people continue to deal with the firm then they should be warned now they will have no recompense if things go wrong. This week I would like to look deeper into a worrying aspect of this episode – the broader FX industry’s failure to heed the warning given three years prior.

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