FXCM UK Merger Limited registers $35.8m impairment loss on value of investment in subsidiary undertaking

Maria Nikolova

FXCM UK Merger Limited, whose main asset is its investment in Lucid Markets Trading Limited, made no mention of a possible sale of Lucid.

FXCM UK Merger Limited has made public its report for the full year to December 31, 2016.

FXCM UK Merger Limited is a Person with significant control in Lucid Markets Trading Limited. According to the UK Companies House service, FXCM UK Merger owns more than 50% but less than 75% of the shares and voting rights of Lucid Markets Trading. The latter is a holding company of subsidiary LLP, aka Lucid Markets LLP, an electronic market maker and trader in the institutional FX spot and futures markets.

In its latest report, FXCM UK Merger made no statements as to an eventual sale of Lucid Markets, although it said that it “regularly assesses the value of its investment in the subsidiary”. For that matter, let’s note that FXCM UK Merger Limited reported a $35.8 million impairment loss on the value of the investment in its subsidiary undertaking in 2016. The company incurred a loss of $33.3 million last year, attributed mostly to a drop in turnover from $13.5 million to $3 million.

Lucid Markets has been one of the non-core businesses that the broker has been actively marketing for sale, as it seeks to repay the remainder of its loan to Leucadia.

In late August, FXCM stated that $66.7 million remains outstanding on the Leucadia loan. FXCM has used $46.7 million of proceeds from the sale of its stake in FastMatch to pay down the Leucadia loan and expects additional paydowns in the coming months. The company, however did not specify where the money for these paydowns will come from. It is actively marketing for sale Lucid Markets and V3 Markets, but thus far there have been no announcements on an actual buyer.

Global Brokerage Inc (NASDAQ:GLBR), formerly known as FXCM Inc, owns more than 50% but less than 75% of the shares and voting rights of FXCM UK Merger.

FXCM has sought to distance itself from Global Brokerage, claiming that it has “no responsibility or obligation for GLBR’s debt or other obligations”. But the company has admitted that Global Brokerage is a shareholder of FXCM with 50.1% equity ownership and a minority economic interest.

In the meantime, Global Brokerage’s share price remains low, hence the risk of a possible NASDAQ delisting is still out there. Global Brokerage has earlier warned that a delisting would result in a default.

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