Is this the catalyst for other Forex brokers (Saxo Bank, Alpari, Oanda, FxPro???) looking to go public?
Leading global retail FX broker FXCM, a member of LeapRate's Approved List of regulated FX brokers, hit a major milestone on Monday when its share price on the NYSE rose to exceed its December 2010 IPO price for the first time in about a year and a half.
Since FXCM announced its Q4 results and February volumes last week, FXCM stock has rallied 3% to now sit at $14.07 per share. FXCM went public in December 2010 at $14 per share.
FXCM share price, Dec 2010-present. Source: Google Finance.
Other than being a neat milestone for FXCM, the major effect of FXCM's share price rise may indeed be on some of its competitors. A number of other retail FX firms have had their eye on going public for some time but have been basically unable to, as long as the market was bearish on FXCM and its rival Gain Capital (Forex.com), which both went public in December 2010.
While FXCM shares have rallied back to be "above water" after hitting a low of $8.50 last August -- rising alongside the general equity market, which has hit all-time highs -- rival Gain Capital's shares remain in the dumps. Gain went public alongside FXCM at $9 per share, and today Gain shares sit at $4.18 -- less than half the IPO price and, after taking into account Gain's cash-on-hand, valuing Gain Capital's business at basically zero. Gain announces its own Q4 results later today, we'll provide a brief analysis when they become available. (For more on the valuation of retail FX brokers see the LeapRate-Dow Jones Forex Industry Report).
Nevertheless, we believe that investors will look to FXCM as the "industry leader", and will not care much about what has happened to Gain as a smaller firm, in looking at other potential IPO candidates in the sector. Firms which can demonstrate that they are also "leaders" in their markets -- such as Alpari in Russia, FxPro or Saxo Bank in Europe and in Asia, MIG Bank in Switzerland, and AxiTrader in Australia / APAC -- will have a much better chance now at convincing investors that there is money to be made in buying the shares of retail FX brokers.
If the equity markets hold up in the coming weeks, we wouldn't be surprised to learn more about other retail FX brokers, including some of those we listed below, pursuing their own IPOs. We are actually aware of one specific offering in the early planning stages right now. Stay tuned to LeapRate...
For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.