FXCM on the Acquisitions Trail After IPO?


Earlier this week Robert Lande, chief financial officer of US broker FXCM Inc, was interviewed on Bloomberg about the prospects for FXCM following their recent IPO. Robert also talked about the prospects for retail forex in general. Here's that interview:

Amongst numerous other snippets of interesting information Robert said that:

The overall leverage that's permitted is very high. I mean in the US they've brought down leverage limits now to 50:1 on major pairs.

He went on to mention that in Hong Kong leverage is limited to 20:1, but for some reason neglected to mention that here in the UK you can still find 500:1 without trying very hard.

Robert went on to point out that:

A lot of our competitors, the smaller and medium sized ones, have been closing up shop. Regulators have been increasing capital requirements, they've been decreasing leverage, and all that is leading to the maturing of this industry and having fewer players in the retail FX space.

When he was asked:

Why go public when you did?

Robert said that:

We didn't need the money, but we really thought that going public….. would really add to our credibility with our client base. It's a whole new kettle of fish trading on the New York Stock Exchange and seeing a 10K…. That was the main purpose.

A secondary purpose is…. regulators are raising the bar around the world [which] is resulting in competitors being strained, and I think there's a lot of opportunity to acquire and consolidate the industry further.

It sounds very much as though FXCM are building a war chest to me. Robert went on to explain further:

For us as a company we have been traditionally weak in Europe. We acquired a company in October, the number 3 player in the UK, and we think that Europe will provide an interesting opportunity for us to grow there, where we've been traditionally weak.

So there you have it. If you're a European retail forex broker FXCM wants you! Do you suppose they'll wait until regulators slash leverage on this side of the Atlantic too, and see who falls by the wayside during the resulting "maturing of this industry". On the other hand perhaps they already have a shopping list of brokers that might be tempted by a large wad of cash to follow in ODL's footsteps sooner rather than later?

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