1999–2008: Founding and Refco stake
Forex Capital Markets was founded in 1999 in New York, and was one of the early developers of and electronic trading platform for trading on the foreign exchange market. Initially, the firm was called Shalish Capital Markets, but after one year, rebranded as FXCM. In 2003, FXCM expanded overseas when it opened an office in London which became regulated by the UK Financial Services Authority.[16]
In January 2003, FXCM entered into a partnership with Refco group, one of the largest US futures brokers at the time. Refco took a 35% stake in FXCM and licensed the FXCM software for use by its own clients. Refco filed for bankruptcy on October 17, 2005, a week after a $430 million fraud was discovered, and two months after its initial public offering. Refco's CEO Phillip R. Bennett was later convicted of the fraud.[17]
In November 2005, Refco agreed, in part, to sell its 35% stake back (which included 15,000 customer accounts) to FXCM for $110 million.[18] In March 2006, however, Refco's creditors disallowed the deal and, later, denied a separate $130 million bid by FXCM.[19] Refco's stake in FXCM was eventually sold to a consortium of buyers, including Lehman Brothers Holdings.[20]
2009–2014: Legal issues and initial public offering
In May 2010, FXCM, Inc. purchased the UK-based, ODL Group. FXCM had previously acquired ODL's U.S. business in January 2009. The 2010 acquisition made FXCM the largest retail forex broker in the world with over 200,000 clients and assets of around $800 million.[21][22]
In December 2010, FXCM completed an initial public offering and began trading on the New York Stock Exchange under the ticker symbol, FXCM. Share prices started at $14 with 15,060,000 shares for a total share capital of $211 million.[23][24][25] In its IPO prospectus, FXCM described its no dealing desk trade execution. "When our customer executes a trade on the best price quotation offered by our FX market makers, we act as a credit intermediary, or riskless principal, simultaneously entering into offsetting trades with both the customer and the FX market maker. We earn fees by adding a markup to the price provided by the FX market makers and generate our trading revenues based on the volume of transactions, not trading profits or losses.
2015–2017: Swiss franc jump and U.S. license loss
On January 15, 2015 following a large increase in the price of Swiss francs, FXCM lost $225 million and was in breach of regulatory capital requirements.[42] The following day, the company received a $300-million bailout loan with a 10% interest rate from Leucadia in order to meet its capital requirements. Details of the deal showed that the interest rate could go as high as 17%.[43][44] Later in January, FXCM announced that it would be forgiving 90% of its accounts that incurred negative balances as a result of the unexpected Swiss franc price movement.[45][46] In September 2016, Leucadia extended the original two-year loan by one year.[47]
2017–present: Bankruptcy and ownership by Jefferies
Global Brokerage, Inc. filed for Chapter 11 bankruptcy in November 2017 and was delisted from NASDAQ in December 2017.[52][53][54] Global Brokerage later reorganized out of bankruptcy in February 2018. At that time, however, Global Brokerage's real economic interest in the FXCM Group was between 10 and 50% depending on the amount of distributions FXCM makes.[12] Also in February 2018, FXCM rebranded itself as "FXCM: A Leucadia Company".[55] As of March 2018, FXCM remained the second-largest retail forex broker outside of Japan.[56]
