FXCM's -$225M loss in equity is gone forever (Co Policy doesn't recoup trading losses...sadly). They will sell things off, the first $300m goes to LUK. Also, if they do turn this around, LUK keeps 1/2. $2- $3 staying sideways for now.
Can I lose more money than I deposit? Not with FXCM. It is FXCM’s policy to credit accounts to a zero balance when debit balances occur as a result of trading.” Such leniency is not universal in the industry. Interactive Brokers Group says that several of its clients ran up negative balances after the Swiss franc move. Chairman Thomas Peterffy says the company will seek to recover those funds from its clients. He is puzzled by FXCM’s policy. “When you say on your website that you’re not going to collect any losses in excess of deposits,” he says, “then you’re basically providing a guarantee against loss.” Niv and FXCM didn’t respond to requests for comment.
"Our systems automatically monitor each customer’s margin requirements in real-time and we confirm that each of our customers has sufficient cash collateral in their account before we execute their trades. If at any point in time a customer’s trading position does not comply with the applicable margin requirement because our predetermined liquidation thresholds have been exceeded, the position will be automatically liquidated"
"FXCM Cash on Hand as of September 30, 2014: ($326.7 million) - (FXCM Debt as of September 30, 2014: $188 million) = FXCM's Own Net Cash = $138.7 million."
A $200M deficit is crushing...All the Equity is essentially wiped out. LUK will own the operation & make a nice profit. Go buy some LUK & forget about it.
Yup. FXCM will have a challenge collecting their money from their retail customer base....who has very little. Many personal BK's will be attributed to this event. Long term, LUK gets a surviving company for cheap.
LUK gave them a very short term opportunity to collect the $200M from their clients & pay back the note. The longer it takes or if they cannot, then LUK gets the company. If a suitor really wants FXCM, then LUK gets approx. 90% of the proceeds. With continued currency swings (i.e. the Yen) more clients may keep losing big bucks (more will win too, but were concerned about collecting from the big losers). FXCM will only have value to shareholders if they can payback the note in 6 months or less. If it takes longer, then LUK gets richer & richer....not the shareholders. So what's FXCM worth to FXCM shareholders....Either $8 or nothing. Good Luck...the clock is ticking.
If FXCM can recover money from their clients & repay LUK....then look out! If not, LUK will make some good money. Both FXCM & LUK are undervalued....so go buy BOTH!