FXCM owed $225 million by customers who lost on CHF

[Dentalfloss]

they just got 300 mill bailout money

 

[Jason Rogers]

FXCM Continues Normal Operations, Raises $300 Million in Capital

Hi Everyone,

I know you have been waiting for more information from me, and I would like to thank you for your patience. I wanted to post sooner but the nature of such announcements required me to wait until the official press release:

January 16, 2015

Leucadia National Corporation and FXCM Announce $300 Million Financing to Permit FXCM to Continue Normal Operations

NEW YORK--(BUSINESS WIRE)-- Leucadia National Corporation (NYSE: LUK) and FXCM (NYSE: FXCM) today announced that Leucadia would be providing $300 million in cash to FXCM and its subsidiaries (collectively "FXCM") that will permit FXCM to meet its regulatory-capital requirements and continue normal operations after yesterday's loss of $225 million due to the unprecedented actions of the Swiss National Bank. Under the terms of the agreements, Leucadia is investing $300 million in cash into FXCM in the form of a $300 million senior secured term loan with a two-year maturity and an initial coupon of 10%. The term loan obligations are guaranteed, on a secured basis, by certain of FXCM's domestic subsidiaries. In addition, Leucadia will receive, in the event of a sale of FXCM or its subsidiaries, a certain percentage of the sale proceeds and, in the event FXCM makes other distributions on account of its equity, a corresponding payment for its own account. This transaction is expected to close this afternoon. Drew Niv, Chief Executive Officer of FXCM, stated: "We could not be more grateful to Leucadia and its team for their rapid and effective response and to our regulators, who have been willing to work with us through this challenging process. Leucadia's support and this financing are by far the best alternative for FXCM, our customers, our shareholders, and all other relevant constituencies. We are pleased to continue to act as the leading online provider of foreign exchange trading and related services to retail and institutional customers worldwide."

Click to see full press release: bit.ly/1ua85Ve

 

[Pat494]

Good to see FXCM struggle back onto its feet and thanks to Leucadia.

Highly immoral and unethical of SNB doing what it did, should be sued as they could have done it in smaller steps and caused less grief.

Was the grubby hand of politics involved or just a coincidence Alpari is basically Russian ?

See threads below and see that it is not the first time FXCM have been caught with their pants down.

 

[Forexmospherian]

Wonder what deals and influence Goldman Sachs had in the whole SNB affair - and of course how much profit they made ? - maybe we will never know or they might even spin a yarn that they lost out ;-)

 

[counter_violent]

The fact is that free market principles are not being followed at all, if they were then Europe would have it's house in order and the SNB would not have pegged CHF to that disaster that they call the Euro. It's one thing blaming the banks for all this mess, but quite another when it comes to regulation and governance. Ultimately the buck stops with governments and their free spending borrow now pay back whenever style policies under the name of Keynsianism, which we all know is a total crock of crap.

If FXCM and other brokers put their heads together, maybe they could present a case for compensation and possibly rule changes where central banks and govts are concerned.

 

[Splitlink]

Keynes was not, all, crap and he put it together decades ago. Everyone liked it, at the time. The trouble is that we do not know what to replace capitalism with, because any of the most powerful nations can make of it, what it will. China is not quite there yet but the time will come when they will be doing their share of currency manipulation and there is nothing that the rest will be able to do about it.

 

[Mr. Charts]

Reckless and irresponsible is that the SNB are. They need to be fined for this behaviour.

That wouldn't happen with a major central bank and the ownership of SNB is very diffuse and involves local governments and others.

Right and justice are only loosely related.

The probity and trustworthiness of the Swiss financial system is certainly damaged and there are a lot of unhappy people and businesses who believed the SNB parity promises of only four weeks ago.

 

[Jack o'Clubs]

China is not quite there yet but the time will come when they will be doing their share of currency manipulation and there is nothing that the rest will be able to do about it.

They already are. They closed down a carry trade in offshore copper inventory warehousing in one go by moving the RMB against the speculators.

 

[Pat494]

Love to know how much Soros etc made on this debacle. It could not have been set up better for him, assuming he had fore-knowledge, if he written the script himself.

 

[Splitlink]

Love to know how much Soros etc made on this debacle. It could not have been set up better for him, assuming he had fore-knowledge, if he written the script himself.

Poor, old, Soros. Since he made all that money in 1992, when the pound floated,
we have not let him alone. You have to look on the bright side. For every loser, there's a winner.

It wasn't me, though. My only consolation is that I was not in the market, at the time, and Swiss franc is not one I watch, anyway. It would have been nice to have had them, though, wouldn't it?

With the pound, though, I did well. I will always remember that day. I was in bed with a bad back, listening to the BBC and. in the end, when the PM and his Chancellor were saying how they were going to defend the currency, I thought. Why should I risk it? I forgot the lumbago, hobbled to the phone and rang my currency fund and told them to switch all I had into DMs. I think I did it with about two hours to spare. If I'd been working, I'd have missed the action.

 

[apau]

Wow, $300m rescue deal at 10% interest. So with this bond, that means FXCM are paying $30m a year, isn't that more than they earn a year in profits?! Let's hope that the markets do not experience any more big currency events or the FX firms will be feeling this all over again.

I for one will be staying away from spreadbetting for a while, especially after seeing what ETX did. I can only think that changing customer fills to more "accurate" levels is an act of desperation to not go the same way as FXCM.

This is not good guys and the SNB have a lot to answer for.

 

[gftrader32]

Wow, $300m rescue deal at 10% interest. So with this bond, that means FXCM are paying $30m a year, isn't that more than they earn a year in profits?! Let's hope that the markets do not experience any more big currency events or the FX firms will be feeling this all over again.

I for one will be staying away from spreadbetting for a while, especially after seeing what ETX did. I can only think that changing customer fills to more "accurate" levels is an act of desperation to not go the same way as FXCM.

This is not good guys and the SNB have a lot to answer for.

What did ETX do?

 

[Pat494]

The rescue package has kicked in for me and my FXCM account is not as dead as dodo ( Zurich gnomo )

I doubt they will last with a 10% payback though

Alpari (UK) is lifeless. Forget The Crimea and rescue your own economy Ruskies.

 

[apau]

What did ETX do?

I got this from ETX;

"Dear,

Please be informed that due to today’s exceptional market movement in CHF crosses, we have been filling clients’ orders and positions in an extremely illiquid market.

As such, we are now reviewing all executed fills and we will amend them to more accurate levels. This may result in a worse execution rate than the originally filled level.

Please keep in mind that, therefore, the balance in your account(s) might change and your trading activity be affected.

Should you have any questions regarding our market trading hours please contact 0800 138 4582.

Kind Regards,

ETX Capital"


Amend them to more accurate levels! This could be painful to a lot of customers and has damaged the spread betting industry in my opinion.

 

[forker]

I got this from ETX;

"Dear,

Please be informed that due to today’s exceptional market movement in CHF crosses, we have been filling clients’ orders and positions in an extremely illiquid market.

As such, we are now reviewing all executed fills and we will amend them to more accurate levels. This may result in a worse execution rate than the originally filled level.

Please keep in mind that, therefore, the balance in your account(s) might change and your trading activity be affected.

Should you have any questions regarding our market trading hours please contact 0800 138 4582.

Kind Regards,

ETX Capital"


Amend them to more accurate levels! This could be painful to a lot of customers and has damaged the spread betting industry in my opinion.

Sounds like they trying to clear out some internal issues for regulators to not find. If it smells like 5hit it usually is

 

[apau]

The rescue package has kicked in for me and my FXCM account is not as dead as dodo ( Zurich gnomo )

I doubt they will last with a 10% payback though

Alpari (UK) is lifeless. Forget The Crimea and rescue your own economy Ruskies.

Oh dear, has anyone else seen the details of the FXCM loan!? The stock is going to be destroyed after this! No wonder Leucadia's stock price went up yesterday!

10% interest going up 1.5% every quarter with a cap of 17%.

"The credit agreement also requires the borrowers to pay a deferred financing fee in an amount equal to $10 million, with an additional fee of up to $30 million becoming payable in the event the aggregate principal amount of the term loan outstanding on April 16, 2015 is greater than $250 million or the deferred financing fee of $10 million (plus interest) has not been paid on or before such date."

and then my favourite....

The percentages of any aggregate sales/distributions by FXCM

100% of the loan amount plus any fees goes back to Leucadia

then

The next $350m is split 50/50 between Leucadia and FXCM

and then

Next amount equal to 2 times the balance outstanding on the term loan and fees as of April 16, 2015, such amount not to be less than $500 million or more than $680 million Leucadia get 90%!

That means if FXCM were to sell their assets for $1.1bn, FXCM would receive;

0 from first $300m
$175m from next $350
$45m from the next $450m

Leaving them with $220m from a $1.1bn sale (which equals 20%).

That's if the company is even worth that!

Do these seem right to every else? I may have my numbers wrong.

 

[Pat494]

Oh dear, has anyone else seen the details of the FXCM loan!? The stock is going to be destroyed after this! No wonder Leucadia's stock price went up yesterday!

10% interest going up 1.5% every quarter with a cap of 17%.

"The credit agreement also requires the borrowers to pay a deferred financing fee in an amount equal to $10 million, with an additional fee of up to $30 million becoming payable in the event the aggregate principal amount of the term loan outstanding on April 16, 2015 is greater than $250 million or the deferred financing fee of $10 million (plus interest) has not been paid on or before such date."

and then my favourite....

The percentages of any aggregate sales/distributions by FXCM

100% of the loan amount plus any fees goes back to Leucadia

then

The next $350m is split 50/50 between Leucadia and FXCM

and then

Next amount equal to 2 times the balance outstanding on the term loan and fees as of April 16, 2015, such amount not to be less than $500 million or more than $680 million Leucadia get 90%!

That means if FXCM were to sell their assets for $1.1bn, FXCM would receive;

0 from first $300m
$175m from next $350
$45m from the next $450m

Leaving them with $220m from a $1.1bn sale (which equals 20%).

That's if the company is even worth that!

Do these seem right to every else? I may have my numbers wrong.

Ridiculously harsh terms imho
FXCM are still advertising on T2W.
Be kinder to give it the coup de grace

 

[apau]

Ridiculously harsh terms imho

Very harsh indeed, and normally they are only this harsh if the risk is high!

FXCM must have been desperate.

 

[Forexmospherian]

Very harsh indeed, and normally they are only this harsh if the risk is high!

FXCM must have been desperate.

Think about it though

If Leucadia had not stepped in - and nobody else had - they would have disappeared - and would no longer be trading etc etc

Now they are still trading - and have a slim chance of surviving and finding a better deal in next 3-6 months to get out the one with their saviours.

If they dont find one - they are still trading etc etc and carry on

There is at least hope - until Leucadia appeared - there was no hope.

Next question - is Leucadia owned by the Swiss ( lol)

FXCM need to get Goldmans involved - I am sure they could sort them out as well as sorting out another deal and getting out of paying Leucadia anything - whilst walking away with millions in fees ( lol)


F

 

[spinola]

Yeah, fxcm can also cease to be and dissolve. i.e. THE DEATH OF THE COMPANY !


So , DEATH, or a chance of life. DEATH or a chance of life ?


:cheesy: