Forex Capital Markets, more commonly known as FXCM, is a brokerage firm founded in 1999 that specializes in online forex trading. FXCM is originally based in the U.S., but through the years it has grown exponentially and has expanded to other parts of the world. To name a few, they have offices in London, Sydney, Paris, Dubai, and even Hong Kong.
Earlier this month, FXCM decided that they wanted to raise more capital and become even bigger. And what better way to do this by being one of the first retail foreign-exchange brokers to be publicly traded? According to the Securities and Exchange Commission (SEC), FXCM received around 211 million USD when it became public, just a couple of million below the 226.7 million USD they initially expected. Not too shabby, eh?
Gain Capital (Forex.com)
Founded in 1999, GAIN Capital Holdings, Inc. is one of the world’s largest providers of online trading services. While it provides access to gold, silver, stock indices, and commodities markets, it specializes in foreign exchange (FX) and contracts for different (CFDs). It also operates Forex.com, a well-known brand in the forex industry.
With more than 52,000 active accounts in over 140 countries, the company has an average trading volume of 250 billion USD, including rollovers and counterparty transactions. In fact, it posted earnings of 188 million USD for the 12 months ended September 30 this year.
In August 2009, Gain Capital filed for an IPO in the hopes of raising 125 million USD. It had planned on selling 11,000,000 shares, with each share around the 13-15 USD price range.
On December 15, GAIN Capital began trading in the New York Stock Exchange under the stock symbol GCAP. It raised a total of 81 million USD when it offered 9,000,000 shares for 9 USD each, putting the value of the whole company at around 357 million USD.
Will this be beneficial to the Forex industry? If you ask me, yes I think it could be.
First of all, going public gives these brokers more credibility. The more “public” a company becomes, the more open it will be in sharing information about their operations to their shareholders. In a day and age when scams are so prevalent, being transparent is fast becoming a necessity to survive the recent shifts in financial regulation.
In addition, public companies have a strong duty to do what is best for its shareholders. This bodes well for its clients (traders), since it means that there’s additional pressure to put forth their best products in order to attract new traders, keep their existing clients happy, which in the end maximizes returns on shareholder investment.
So, by going public, a broker will have more capital in their war chests to help develop new and better technologies to meet those goals.
The forex market is the largest market in the world, but it still has a long way to go to catch up to equities in terms of mainstreet awareness and popularity. But as more and more brokers enter the forex trading industry, and/or become public, hopefully competition will become fiercer and lead to a better trading experience for us all.