Gain Capital Holdings, a global provider of online trading services, has signed a definitive agreement with FXCM to acquire the foreign exchange broker’s US client base.
The acquisition of the US client base of FXCM will transform GAIN Capital into biggest brokerage in the US. Under the terms of the agreement, customers of FXCM’s U.S. business will be transferred to GAIN Capital’s retail trading service www.forex.com. The transaction is expected to close before the end of February 2017.
Reasons behind the deal
GAIN Capital initially brought to light its negotiations with FXCM early on Tuesday, following the announcements by US regulators that banned FXCM.
The strict measures were imposed after the regulators discovered that during several years, the broker traded against its customers while claiming to use a “No Dealing Desk” order execution model.
“We are excited to welcome customers of FXCM’s U.S. operations to our award-winning FOREX.com service. They will become part of one of the largest and most well-capitalized providers of retail FX trading services globally. At GAIN Capital, we pride ourselves on our 17-year track record of protecting our clients and delivering on their FX trading needs,” said Glenn Stevens, CEO of GAIN Capital.
FXCM intends to implement a restructuring plan that implies laying off approximately 150 employees, or about 18 percent of its global workforce.
Shares of FXCM
Shares of FXCM Inc. plunged 50 percent to $3.45 on Tuesday, enough to make it the biggest decliner on the Nasdaq exchange. The close was below the previous split-adjusted record close of $5.30 on December 11, 2015.
On the other hand, shares of GAIN Capital Inc. rallied 5.3 percent during the New York trading session, reflecting optimism about the acquisition.
The deal between the companies is set to augment GAIN’s presence in the United States. GAIN Capital is regulated in 8 jurisdictions, with approximately 140,000 customers. GAIN also operates regulated retail trading operations in the UK, Hong Kong, Japan, Australia, Canada, Singapore and Grand Cayman.