FXCM
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| Type | Public |
|---|---|
| Traded as | NYSE: FXCM |
| Industry | Financial Services |
| Founded | 1999 |
| Headquarters | New York, United States |
| Key people | Drew Niv, CEO and joint founder |
| Services | Financial broker, On-line forex trading |
| Employees | 844 [1] |
| Website | http://www.fxcm.com |
Forex Capital Markets, better known as FXCM, is a retail on-line foreign exchange broker based in New York. It provides its services through its own online trading platforms and through third party platforms such as MetaTrader 4.
FXCM allows retail and institutional clients to speculate on global foreign exchange markets in what is known as 'margin forex trading'. It is one of the largest of the online margin based foreign exchange brokers. Outside the US, in addition to forex, it also provides trading in contract for difference (CFDs) on major indices and commodities such as gold and crude oil.
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[edit] History
Forex Capital Markets was founded in 1999 in New York, and was one of the early developers of on-line forex trading.
In Jan 2003 FXCM entered into a partnership with Refco group, which at that time was one of the largest US futures brokers. Refco took a 35% stake in FXCM and licensed the FXCM software for its own clients to use. However, following the collapse of Refco in Oct 2005, FXCM became entrenched in the bankruptcy proceedings which carried on for a number of years.
In 2003, FXCM opened an office in London and became regulated by the UK Financial Services Authority.
In 2008, the US futures industry self-regulatory organization, the National Futures Association (NFA) obtained permission from the Commodity Futures Trading Commission (CFTC) to increase the minimum capital requirements for ‘Forex Dealer Members’, of which FXCM was one, to $20M in staged increments in response to failures of a few forex brokers. This had the effect of driving out a number of FXCM smaller competitors and allowed FXCM to increase its client base by acquiring business from some of these companies, many of whom either ceased all operations or simply moved out of the US.[2][3]
In 2008 FXCM continued its overseas expansion and opened offices in France and Australia.
In 2009 FXCM UK started offering a limited number of CFD to its non-US based clients in addition to its currency products.
In May 2010 FXCM acquired the UK CFD and spreadbetting provider ODL.[4] The deal gave them a much bigger presence in the UK and an existing CFD trading and financial spread betting client base concentrated in Europe.
On December 2010, FXCM went public and began trading on the NYSE. The initial public offering price was 14.00 per share.[5]
In February and March 2011 a number of different law firms filled class actions lawsuits against FXCM alleging fraud and racketeering because of deceptive and unfair trade practices and also misleading shareholders during the 2010 IPO.[6][7][8][9]
In August 2011, NFA fines FXCM $2 million for slippage malpractices. FXCM reached settlements with the NFA and CFTC over the practices of $2 million and $6 million respectively, relating to not passing along positive slippage (i.e. order fills better than what order rules specified) to customers on certain order types prior to August 2010. In conjunction with these settlements, FXCM provided clients with restitution for the total amount of positive slippage, approximately $8 million.[10]
In October 2011, FXCM completed its acquisition of Japanese FX broker Foreland Forex Co., Ltd. for approximately $17 million, net of cash and liquid assets acquired.[11]
On October 25, 2011, three debtors, Certified, Inc., Global Bullion Trading Group, Inc., and WJS Funding, Inc. filed an adversary complaint in the United States Bankruptcy Court for the Southern District of Florida against Forex Capital Markets LLC, ODL Securities, Inc., and ODL Securities, Ltd. (“Defendants”). The complaint asserts claims under the Federal Bankruptcy Code to recover allegedly preferential and fraudulent transfers to the Defendants, under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C §1961 et seq., as well as the common law. The complaint seeks an unspecified amount of compensatory and punitive damages, interests, and costs.[12]
[edit] Operations
FXCM has its headquarters in New York and offices in Dallas, San Francisco, Hong Kong, London, Tokyo, Paris, Berlin, Sydney, Dubai, Milan, Santiago de Chile and Athens.
As well as the main FXCM brand, it also owns the FX news and research web site http://www.dailyfx.com.
[edit] Industry
FXCM's main business is allowing retail clients to speculate on forex markets with leverage. There is some criticism of the industry saying that few retail traders have the experience to make money trading forex. Drew Niv, chief executive of FXCM, has been quoted as saying that "If 15% of day traders are profitable I'd be surprised."[13]
FXCM promotes a 'no dealing desk' service for its currency products where it takes prices from a number of major banks and allows clients to trade the best price at any given time. This is also known as a direct market access (DMA) model which is in contrast to a market maker model more commonly used by forex brokers.
[edit] References
- ^ "FXCM Inc. Prospectus". FXCM. http://www.sec.gov/Archives/edgar/data/1499912/000095012310110764/y87330b4e424b4.htm. Retrieved 11 December 2011. (2011)
- ^ "Net Capital Requirements for Forex Dealer Members". NFA. 2008-09-24. http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2198. Retrieved 2010-07-28.
- ^ "NFA proposal could cause significant shakeup among forex brokerages". Currency Trader Magazine. August 2007. http://mediaserver.fxstreet.com/Reports/e14295c4-8509-4ad0-88b5-ee4b026a9442/761e4cac-f3a1-4299-b73b-eb6ff05ae441.pdf. Retrieved 28 July 2010.
- ^ Harry Wilson (4 May 2010). "Forex broker ODL accepts US takeover". telegraph.co.uk (London). http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7678650/Forex-broker-ODL-accepts-US-takeover.html.
- ^ Vannucci, Cecile; Spears, Lee (Dec 2, 2010). "FXCM’s IPO Raises $211 Million at Midpoint of Range". Bloomberg. http://www.bloomberg.com/news/2010-12-01/fxcm-seeks-226-million-in-first-online-trading-ipo-since-2007.html. Retrieved Dec 10,2010.
- ^ "Morgan Business Trial Group Files Class Action Lawsuit Against Nation's Largest Forex Dealer -- FXCM". Feb 10, 2011. http://www.thestreet.com/story/11003116/1/morgan-business-trial-group-files-class-action-lawsuit-against-nations-largest-forex-dealer--fxcm.html.
- ^ "Kahn Swick & Foti, LLC And Former Louisiana Attorney General Announce Investigation Into FXCM, Inc. – FXCM". Feb 16, 2011. http://www.thestreet.com/story/11013461/1/kahn-swick-amp-foti-llc-and-former-louisiana-attorney-general-announce-investigation-into-fxcm-inc-8211-fxcm.html.
- ^ "Law Offices of Howard G. Smith Announces Investigation On Behalf of Investors of FXCM Inc.". Feb 17, 2011. http://www.businesswire.com/news/home/20110217007153/en/Law-Offices-Howard-G.-Smith-Announces-Investigation.
- ^ "Kahn Swick & Foti, LLC and Former Louisiana Attorney General File Suit Against FXCM Inc.: Remind Investors With Large Financial Interests of Important 5/2/11 Deadline - FXCM". March 3, 2011. http://www.businesswire.com/news/home/20110303007106/en/Kahn-Swick-Foti-LLC-Louisiana-Attorney-General.
- ^ "FXCM Press Release". October 3, 2011. http://ir.fxcm.com/phoenix.zhtml?c=238885&p=irol-newsArticle&ID=1612849&highlight=.
- ^ "FXCM Press Release". October 13, 2011. http://ir.fxcm.com/phoenix.zhtml?c=238885&p=irol-newsArticle&ID=1617184&highlight=.
- ^ "FXCM 10K Statement Q3 2011, Page 25". November 14, 2011. http://www.sec.gov/Archives/edgar/data/1499912/000114420411064049/v239353_10q.htm.
- ^ Karmin, Craig; MICHAEL R. SESIT (2005-07-26). "Currency Markets Draw Speculation, Fraud". The Wall Street Journal (Dow Jones and Company). http://online.wsj.com/public/article/SB112233048975295402-NbzPFRn1JqQly3JoxqjuFM_9kn8_20060805.html. Retrieved 2007-10-31.
