FXCM keeps pushing to distance itself from Global Brokerage

Maria Nikolova

In a move continuing the efforts of FXCM Group to distance itself from Global Brokerage, the Management Agreement entered by the two entities in September 2016 has been terminated.

Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, has earlier today posted a SEC filing, briefly announcing a termination of a Management Agreement entered into and by FXCM Group, LLC and Global Brokerage Holdings, LLC back in September 2016.

The decision to terminate the agreement was made by the Lead Member Holders of Group, which means: FXCM Holdings, LLC, or Global Brokerage Holdings, and Leucadia.

Under the Management Agreement that was terminated on October 1, 2017, FXCM Group, LLC, a Delaware Limited Liability Company (the “ Company ”), and FXCM Holdings, LLC, a Delaware Limited Liability Company, now known as Global Brokerage Holdings LLC (the “Manager ”) agree that the Company appoints and retains, subject to the further terms and conditions set forth in this Agreement, the Manager to manage the assets and day-to-day operations of the Company and its Subsidiaries, including the Rights.

Under the Management Agreement, the Manager is responsible for the assets and day-to-day operations of the Company and its Subsidiaries and is performing such services and activities relating to the assets and operations of the Company as may be appropriate.

The Manager (inter alia):

  • creates and implements the Company’s annual detailed budget and recommends the annual summary budget (and any material changes to any such annual budget) for approval by the Board of Directors.
  • appoints (or terminate) the executive officers of the Company and its Subsidiaries;
  • makes day-to-day decisions on behalf of the Company, including making operating and capital decisions in the ordinary course of business;
  • causes the Company or its Subsidiaries to, in one transaction or a series of related transactions, acquire any assets or make any investment in an amount not to exceed $5,000,000;
  • causes the Company and its Subsidiaries to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;
  • takes all necessary actions to enable the Company and its Subsidiaries to make required tax filings and reports, including soliciting members for information to the extent such information is reasonably necessary to comply with the provisions of the Internal Revenue Code of 1986, as amended;
  • handles and resolves claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company or any of its Subsidiaries may be involved or to which the Company or any of its Subsidiaries may be subject arising out of the Company’s or any of its Subsidiaries’ day-to-day operations; and
  • uses reasonable best efforts to cause the Company and its Subsidiaries to comply with all applicable laws.

The termination of the agreement by the Lead Member Holders happens just a couple of days after a Memorandum Opinion issued by Vice Chancellor Glasscock of the Delaware Chancery Court said an entire fairness review of the Leucadia deal with FXCM is appropriate.

In the meantime, Global Brokerage Inc is having hard time remaining listed on NASDAQ due to its low market capitalization. The price of Global Brokerage shares remains low, keeping alive the risk of the broker facing a default.

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