BLUE SKY BREAKOUT

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AFTER HOURS MONSTER NEWS OUT!!! FXCM to Consider Sale of Noncore Assets to Help Repay Rescue Loan
Foreign-Exchange Broker May Also Exit From Some Countries
By
Jenny Strasburg And
Telis Demos
Updated Jan. 23, 2015 8:18 p.m. ET
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Foreign-exchange broker FXCM Inc. plans to consider sales of noncore assets to help pay off a $300 million rescue loan it received after trading losses nearly sank the firm.

New York-based FXCM also is reviewing countries where it offers currency trading, with an eye toward possibly lopping off jurisdictions where capital requirements and other costs are too onerous, according to a person familiar with the matter.

FXCM was forced to seek a bailout this month after the Swiss National Bank, in a surprise move, scrapped a cap on the value of the country’s currency. That left FXCM customers owing it about $225 million, and the company warned it might be in violation of capital requirements as a result.
Related

FXCM to Get $300 Million Rescue Package From Jefferies (Jan. 16)
Regulator to Review Leverage Limits for Currency Trades (Jan. 20)
Surge of Swiss Franc Triggers Hundreds of Millions in Losses (Jan. 16)
Interactive Brokers Uncertain How Much of Traders’ Losses It Can Recover (Jan. 20)

Leucadia National Corp. , the holding company for investment bank Jefferies Group LLC, agreed to provide the company with a $300 million secured loan that would enable FXCM to meet regulatory requirements and continue to operate. But the terms of the loan are costly, including an interest rate that starts at 10% and rises over time. The terms also call for FXCM to pay a fee of as much as $30 million if it still owes more than $250 million under the loan on April 16. Leucadia is to receive a cut of the proceeds of any asset sales by FXCM.

“The financing we received from Leucadia has strengthened our balance sheet and gives us the opportunity to grow our core business while reducing our debt through the sale of noncore assets,” FXCM Chief Executive Drew Niv said late Friday.
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Separately on Friday, U.S. regulators took additional steps to address the steep losses suffered by traders and brokers in last week’s unexpected surge in the Swiss franc, moving to temporarily restrict the amount of borrowing, or leverage, used by traders.

A leading contender for sale by FXCM is its minority stake in FastMatch Inc., a separate company that operates an electronic currency-trading platform, people familiar with the matter said. FastMatch matches buy and sell orders among banks, hedge funds and other asset managers. The majority of FXCM’s revenue is from retail currency trading.

FXCM estimates its roughly 30% FastMatch stake could fetch about $70 million, some of the people said. Potential buyers have approached FXCM to express interest in assets including FastMatch, they said.

FastMatch was launched in mid-2012 and started out relying heavily on flow from FXCM’s retail currency-trading business to get a foothold in the market. FastMatch, which is located inside FXCM’s offices in lower Manhattan, has shed much of that dependence as it has launched new services directed at institutional clients.

FastMatch’s chief executive, Dmitri Galinov, said in an interview Friday that FastMatch is in the process of separating its trading entity from FXCM and aims to have that entity fully independent in the next month or two. He declined to discuss FXCM’s plans.

In 2014, 41.5% of FXCM’s business by volume came from Asia; followed by 35.9% from Europe, the Middle East and Africa; 13% from the U.S., and 9.6% from the rest of the world, according to its website, which adds that the company boasts content and advertising in 180 countries and 16 languages.

http://www.wsj.com/articles/fxcm-to-consider-sale-of-noncore-assets-to-help-repay-rescue-loan-1422046908