GAIN Capital Holdings, Inc agrees to an all-cash acquisition by to INTL FCStone Inc. at a rate of $6/share. The trading major firm from New Jersey, US made the decision after reporting losses of $60.8 million in 2019.
The premium paid for the acquisition is around 70%, as the share price of Gain Capital as reported on 26th February was $3.51. The premium accounts for the brand value and goodwill of leading retail platforms like Forex.com, City Index and Daniels Trading. It also facilitates crypto trading and brokerage services.
FX Markets Losing Luster?
While the stock and the crypto markets have remained highly lucrative in the past couple of years, the Forex Markets are witnessing a slowdown. Glenn Stevens, CEO of GAIN Capital, points at low volatility and Brexit as the reason. He says,
“2019 will be marked as a year of multi-decade low volatility, or in some cases, such as Eurodollar, all-time lows, which understandably had an adverse impact on GAIN’s financial performance.”
INTL FCStone, on the other hand, is a Financial Services firm looking to strengthen its control over the online retail trading markets, Foreign Exchange and the crypto markets, by this acquisition. According to leading crypto analyst, Zhu, all FX brokers will soon be dissolved into larger firms.
Su Zhu, the CEO of Three Arrows Capital notes on the acquisition,
I think retail traders prefer stocks, crypto mkts now. better chance of winning, more fair market. They’ll mainly get acquired on a $/active customer basis as a customer database acq, not for much else. would be bullish IBKR, and cryptoderiv exchanges
Furthermore, cyptocurrency spot and derivatives exchange have been performing quite well. Exchanges with tokens like BNB, Huobi, etc. are reporting healthy periodic coin burns in according with the earned exchange fees.
The total market capitalization of top exchange tokens is more than $5 billion, with BINANCE Coin (BNB) leading at $3 billion. The rising popularity and trading interest in cryptocurrencies will look to favor the service providers in the future as well.
Do you think FX markets are coming to a standstill or they will rise again? Please share your views with us.
