FXCM plunges, regains some ground with shares halted after Swiss franc peg dropped

By Rebecca Melvin

New York, Jan. 16 – A primary focus of Friday’s trading session was the FXCM Inc. convertibles, which plunged to as low as 30 and then regained ground to trade in the mid-60s, as shares were halted pending news of how the New York-based foreign exchange would cope with massive client losses. The losses are related to the spike in the Swiss franc after the Swiss National Bank dropped its currency cap versus the euro on Thursday.

FXCM warned that client losses caused by the Swiss franc’s surge when the cap was removed may have put it in breach of regulatory capital requirements. But late Friday, Leucadia National Corp., which owns Jefferies Group LLC, said it extended to FXCM a $300 million two-year secured term loan with an initial coupon of 10%.

The deal will allow FXCM to continue normal operations and was reminiscent of Jefferies’ rescue of Knight Capital Group Inc. in 2012 after the electronic trading firm suffered $440 million in losses due to a trading error.

“FXCM was kind of the focus [today]” a New York-based trader said. “There wasn’t an astronomical amount of volume, but it was what everyone was watching.”

Gain Capital Holdings Inc.’s 4.125% convertible senior notes came off as well, although shares of the Bedminster, N.J.-based trading services provider were positive after the company said that it actually made money through the sharp currency move.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.