GAIN Capital puts sum paid for FXCM US client accounts at $7.2m at end of Q3’2017

Maria Nikolova

GAIN Capital has paid $7.2 million to FXCM as consideration for the purchased accounts for the nine months ended September 30, 2017, according to GAIN’s latest filing with the Securities and Exchange Commission.

Gain Capital Holdings Inc (NYSE:GCAP) has paid $7.2 million to FXCM as consideration for the purchased US retail FX accounts for the nine months ended September 30, 2017, according to an update in the 10-Q report GAIN filed with the United States Securities and Exchange Commission (SEC) on Wednesday.

As many of you probably recall, on February 7, 2017, GAIN Capital entered into an agreement with Forex Capital Markets L.L.C. (FXCM) to acquire substantially all of FXCM US-domiciled customer accounts. In consideration of the transfer of these accounts, GAIN agreed to pay FXCM, without duplication:

  • $500 per account for each transferred account that first executes a new trade with GAIN during the 76-day period immediately following the closing of the account transfer; and
  • $250 per account for each transferred account that (i) did not execute a new trade with GAIN during the Initial Period and (ii) executes a new trade with GAIN during the 77-day period immediately following the last day of the Initial Period.

The $7.2 million acquisition value reported at the end of the third quarter of 2017 represents a small change compared to the $7 million reported by GAIN at the end of the second quarter of 2017. The report for the first quarter of 2017 has shown that GAIN paid $5.1 million to FXCM in line with the acquisition agreement.

In its latest 10-Q filing, GAIN reiterated that a part of its growth strategy is to enter new markets, and that as it does so it will become subject to regulation in those markets. In some instances, regulators have adopted a wide range of changes that have had a substantial effect on the manner in which the company operates. GAIN mentions the new rules for the CFD sector planned by the UK Financial Conduct Authority (FCA), which include enhanced risk disclosures, a ban on offering account bonuses or similar promotional incentives to clients, mandatory margin close-out levels for retail clients and limitations on the leverage that may be offered to clients, with the limitations varying based on whether the clients are classified as experienced or inexperienced using criteria identified by the FCA.

In June 2017, the FCA stated that any further action will be delayed pending a review by the European Securities and Markets Authority, which has been reviewing regulatory actions relating to CFDs taken by various European regulators and is expected to propose new rules to regulate the CFD industry in 2018.

These changes are important for GAIN’s UK businesses, such as GAIN Capital UK Ltd. The company confirmed that the license of another of its UK businesses – GAIN U.K. Ltd., was deregistered with the FCA on October 6, 2017 .

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