FXCM keeps talking of plans to sell interests in FastMatch, V3 and Lucid, but no sale yet

Maria Nikolova

The carrying value of FXCM’s equity interest in FastMatch is $5.1 million as of March 31, 2017.

Those familiar with the developments around FXCM over the past couple of years must be aware that the company has been selling its non-core assets since the first quarter of 2015, in an attempt to repay a $300 million loan to Leucadia. The institutional business has also been affected by the plans and we have grown accustomed to seeing announcements about FXCM seeking to dispose of its interests in FastMatch, Lucid Markets Trading Limited (Lucid) and V3 Markets (V3).

The report for the first quarter of 2017, published several hours ago by Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, also features the same old statement:

“The remaining non-core assets to be sold include our investments in FastMatch, Inc. (“FastMatch”), Lucid Markets Trading Limited (“Lucid”) and V3 Markets, LLC (“V3”). We are in active sales processes for all of these assets.”

However, there is no information on a particular deal.

FastMatch is a particularly interesting case to consider. Whereas FXCM does indeed hold a majority stake (50.1%) in Lucid and V3, it holds only a 34.5% non-controlling equity interest in FastMatch. Lucid and V3 bring costs. FastMatch brings income.

The carrying value of FXCM’s equity interest in FastMatch was $5.1 million as of March 31, 2017 and $4.6 million as of December 31, 2016. FXCM’s share of the income of FastMatch was $0.5 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively.

Whereas FXCM still has FastMatch amid the entities in which it has an interest, it is not so obvious that FastMatch wants to stick to this status quo. Shortly after US regulators posted their findings into the misleading statements and practices of FXCM, FastMatch reshuffled its Board and issued a statement stressing its independence from the broker.

“FastMatch develops and operates trading platforms concentrating on both the sell-side and buy-side market segments. FXCM is a passive minority owner of FastMatch. FastMatch operates as a completely independent entity of FXCM with no operational dependencies between two firms”, FastMatch said back then.

The statement is in tune with FinanceFeeds’ view, which suggests that FastMatch will seek to distance itself from the broker and may even try to remove FXCM from its commercial structure, as what has now transpired at FXCM does not fit with FastMatch’s ethos.

Who the buyer might be is a matter of speculation. Some of FinanceFeeds’ readers may recall that back in July 2015 there was speculation of ICE seeking to buy FastMatch for a sum in the $200-$250 million range.

What is apparent is that FastMatch is a valuable asset and it is obvious that FXCM is shopping around for the best offer. This is a sound business approach. But until when? NASDAQ has issued a warning regarding the low market capitalization of Global Brokerage that could see the company delisted. Yesterday, Global Brokerage stated that a potential delisting would possibly lead to an event of default and that it is negotiating refinancing alternatives. The time to generate cash is running out for FXCM.

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