Leucadia revises FXCM loss exposure estimate, confirms Drew Niv holds active role in Global Brokerage

Maria Nikolova

Leucadia’s maximum exposure to a loss from its involvement with FXCM includes the carrying value of the term loan ($132.8 million) and the investment in associated company ($186.7 million).


Leucadia National Corp. (NYSE:LUK) has published a detailed financial report for the first quarter of 2017 with the United States Securities and Exchange Commission (SEC), with our attention pinned on any mention of FXCM, given that the brokerage’s settlements with US regulators happened during the period covered by the report.

As per Leucadia’s previous financial report – the one for the full year to December 31, 2016, its maximum exposure to a loss as a result of its involvement with FXCM was $500.8 million. In the latest report, the estimate is revised to $319.5 million. Leucadia explains that its maximum exposure to loss due to FXCM stood at $319.5 million at March 31, 2017, with the number representing a sum of the carrying value of the term loan ($132.8 million) and the investment in associated company ($186.7 million).

Regarding the repayment of the loan that Leucadia extended to FXCM back in January 2015, the company says that it received $42.7 million of principal and interest from FXCM during the three months ended March 31, 2017, with $123 million remaining outstanding under the term loan as of March 31, 2017. The proceeds from the sale of FXCM’s US retail FX accounts to GAIN Capital, as well as regulatory capital released after a sale, have been used to pay down the Leucadia term loan.

FXCM is considered a variable interest entity (VIE) and Leucadia’s term loan and equity ownership are variable interests. Leucadia has determined that it is not the primary beneficiary of FXCM because Leucadia does not have the power to direct the activities that most significantly impact FXCM’s performance.

Leucadia does not hold any interest in Global Brokerage Inc, formerly known as FXCM Inc, the publicly traded company and issuer of senior convertible notes. Global Brokerage holds an economic interest of 74.5% in Global Brokerage Holdings, which holds 50.1% of FXCM. Leucadia owns the remaining 49.9% of FXCM, and its senior secured term loan is also with FXCM, which is a holding company for all of FXCM’s affiliated operating subsidiaries.

Another point to highlight in Leucadia’s report: Drew Niv’s status. As FinanceFeeds has informed you, Drew Niv retains an Interim CEO role in Global Brokerage. Leucadia’s latest report confirms that “on February 21, 2017, Mr. Niv resigned from his positions as Chief Executive Officer and Chairman of the Board of Global Brokerage, but remains as acting Chief Executive Officer of Global Brokerage until his successor is identified”.

This is the situation nearly three months after US regulators published their findings into the misleading business practices used by FXCM in the US between 2010 and 2014.

Read this next

Retail FX

eToro is latest platform to suspend Terra’s LUNA, Binance resumes trading

Israeli social trading network eToro has become the latest platform to suspend trading on the Terra (LUNA) cryptocurrency in light of a market-wide downturn.

Industry News

UK court allows ThinkMarkets’ “obscure” B-book claims against IS Prime

“The Judge added that “Think did need to address the concerns expressed” as its counterclaim “suffers from a lack of detail, obscurity and potential inconsistency”.

Retail FX

Brazilian Broker XP launches crypto trading to 3.5M users

XP Inc (XP.O) is set to launch a crypto trading platform, dubbed ‘XTAGE’, as Brazil’s largest broker is looking to tap into the growing interest in trading bitcoin and other digital assets.

Retail FX

easyMarkets adds MT5 as demand for platform continues to grow

easyMarkets has joined a growing group of brokers in switching over to MetaTrader 5 (MT5), becoming the latest retail platform to incorporate the platform into its live trading infrastructure.

Institutional FX

SGX’s FX volume shines in a largely lackluster April

The Singapore Exchange (SGX) notched a healthy gain in its FX and indices volumes, despite seeing a wavering performance across commodity and securities segments.

Industry News

Devexperts webinar: Attracting retail traders with fractional trading

Following the successful webinar on introducing crypto to retail investors, Devexperts is returning to host a new one about fractional trading. 

Digital Assets

Relai to launch bitcoin debit card to unlock BTC via every purchase

To attract more retail investors to the crowdfunding project, Relai has promised 0% fees on transactions on the Relai app for those who invest €5,000 or more.

Digital Assets

Amid crypto meltdown, Tether reduces corporate debts in USDT reserves

Tether, which is closely affiliated with crypto exchange Bitfinex, has drastically reduced its holdings of commercial debt in its reserves over the last six months. Instead, the stablecoin issuer allocated most of its non-fiat reserves to Treasury bills, almost doubling assets in short-term government securities.

Industry News

TrustPay launches SEPA instant payments

” Our clients will now be able to make instant transactions with the immediate settlement of funds, which makes business more effective in today’s fast world.”