FX Concepts bankruptcy detailed

Worlds largest currency hedge fund, once $14B, ended with just $2M under management and $79M liabilities

Few people would have thought that John Taylor’s once mighty currency hedge fund would be going out of business so soon after it was established as a leader in the industry. Once a $14 bln dollar giant it ends up with having less than $2 mln in assets and just a touch over $79 mln dollars in liabilities. The company’s filings on Monday have revealed that income has been stagnating for the past three years.

FX Concepts has agreed to sell its trademark and trading models to Ruby Commodities Inc. for $7.48 mln, pending a bankruptcy judge’s approval, according to a Bloomberg report. Ruby made the best offer for all the company’s assets after 39 rounds of bidding.

According to an article by Reuters the fund suffered from lousy returns in its systematic trading business. The use of computer models in trading did not help the company. Systematic trading has been a very competitive field as of late and the fund seems to have lost the algo battle. We all know that the FX market just as any other is a zero sum game, but it is always a surprise to hear from a major player that they are going out of business.

In early September the San Francisco Employee Retirement System gave notice to the fund that it’s redeeming its investment which at the time constituted 66% of the fund’s assets under management. The income of FX Concepts for the previous three years has been stated at $173,000 in 2011, $1.13 mln in 2012 and a mere $35,000 dollars up until September 2013.

If not much else, this proves that any market participant has equal opportunities to succeed in this tough trading environment and further on it demonstrates that even proven experts such as John Taylor, can get it wrong under certain circumstances.

For a link to the full article on FX Concepts’ court filing visit Reuters’ website.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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