But poor planning left GFT's clients unable to trade for several days.
If this story sounds like a poorly scripted one to you, then you're probably right. Just three days after GFT dropped the surprise that it is abandoning the U.S. retail FX market -- thereby putting its clients in a position-closing-only basis -- now comes word that Gain Capital is buying these clients, for an undisclosed sum.
Clearly, this deal came together very quickly -- if it had been planned ahead, then surely GFT would have engineered a swift exit of the business, while simultaneously transferring its U.S. clients to another firm (i.e. Gain Capital) -- and avoiding the painful need to keep their clients in limbo for several days.
Poor planning, indeed. And to us, a demonstration that the firm put its own interests ahead of those of its clients. Why not just call several competitors, hold a quick and quiet auction for your client assets, and then quickly announce a deal without having to freeze out clients for several days?
Deal-size-wise, we are fairly certain that very little money changed hands here, perhaps a couple of million dollars. This is not the first time Gain has made such an acquisition. When Deutsche Bank decided to exit the retail FX business by shuttering its entrant dbFX in early 2011, we reported that Gain paid just $2.5 million in upfront cash, plus contingent future payments which at the time Gain estimated at $7 million.
For the full Gain Capital announcement click here.
For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.