Forex house FXCM gets US$300m rescue after Swiss franc hit
[NEW YORK] US foreign exchange broker FXCM was given a US$300 million (S$398 million) cash injection on Friday after client losses on the sharp surge in the Swiss Franc left it on weak capital footings.
The funds came from Leucadia National Corp in the form of a secured two-year term loan with a hefty 10 per cent interest rate, the two firms said in a statement.
The loan "will permit FXCM to meet its regulatory-capital requirements and continue normal operations after yesterday's loss of US$225 million due to the unprecedented actions of the Swiss National Bank." FXCM said early on Friday that it faced problems meeting regulatory capital requirements after clients ran up huge losses which their accounts could not cover.
The company's shares plummeted 90 per cent before the US markets opened and were immediately suspended on the New York Stock Exchange after trade began.
"We could not be more grateful to Leucadia and its team for their rapid and effective response and to our regulators, who have been willing to work with us through this challenging process," said Drew Niv, FXCM chief executive.
"Leucadia's support and this financing are by far the best alternative for FXCM, our customers, our shareholders, and all other relevant constituencies." Leucadia, a holding company, is the parent of investment bank Jefferies Group, which itself rescued a major broker, Knight Capital, after it foundered in 2012.
AFP
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