Ticker change not helping, FXCM / GLBR shares down another 16%

The rebranding of FXCM Inc to Global Brokerage Inc (NASDAQ:GLBR), and the change of its NASDAQ ticker symbol from the eponymous FXCM to GLBR, hasn’t exactly seemed to work.

At least so far.

Shares of FXCM / GLBR continued to fall in its first week trading under its new moniker, down 16% on the week. GLBR shares set a new 52 week (and all-time) low at $2.40, before closing Friday at $2.50 per share.

Global Brokerage Inc is, of course, now just a holding company which owns 50.1% of operating company FXCM Group, LLC. The other half (or technically 49.9%) of FXCM Group is owned by Leucadia National Corp (NYSE:LUK), which took the direct stake in the operating company (not the publicly traded company, a common misconception) as part of a restructuring of its loan to FXCM last September.

The operating company, and the company brand vis-a-vis traders, remains FXCM and not Global Branding Inc.

The issue seems to be that despite its bargain basement share price, investors do not seem to be willing to jump on the FXCM / GLBR bandwagon. Despite the Leucadia loan restructuring and extension FXCM still owes Leucadia in the neighborhood of $150 million with no easy way to repay. And with interest being charged at a whopping 20.5%, virtually all of FXCM Group’s free cash flow is being directed to Leucadia for the foreseeable future, not to the publicly traded company.

As far as having more assets to sell to pay down the debt… well FXCM just gave away its US clients, representing about 20% of its overall volumes, to rival Gain Capital Holdings Inc (NYSE:GCAP) for no money up front, in a deal which we estimate will yield FXCM maybe a few million dollars over the next few months.

As far as FXCM’s other operations in Europe, Australia and the Far East, we recently reported that FXCM competitors large and small have been gearing up campaigns targeting large FXCM clients, IBs and affiliates. With the company and its co-founders Drew Niv and William Ahdout being fined and banned from the US forex market for what US regulators termed was a long term defrauding of customers, and the subsequent exit of Mr. Niv (and Mr. Ahdout) from active management of the company, competitors are actively on the attack.

Global Brokerage Inc also owes another $190 million in the form of convertible notes, so the debt story doesn’t end with Leucadia.

Read Also: