LeapRate's Daily Forex Industry Newsletter
Join now to receive first access to our EXCLUSIVE reports and updates.
Screenshot of a breaking news alert e-mail from Q2 2017
Tradefair asks its clients to switch to GFT UK, which is in process of being acquired by Gain Capital.
Things keep going from bad to worse at UK spreadbetting firm London Capital Group (LON: LCG). After switching CEOs twice this year, enduring acquisition rumors which fizzled out, and reporting disappointing first half results, now comes word that one of the company’s most important white label partners is leaving it for rival GFT.
Tradefair, a wholly owned subsidiary of leading peer-to-peer online gambling company Betfair, had operated until now as a white label of LCG. As a white label, the underlying clients of Tradefair are actually legally direct clients of LCG — LCG pays its white label partners like Tradefair a fee for acquisition plus a fee based on client activity. Tradefair clients represented more than 5% of LCG’s profits in 2013 to date.
Tradefair will now shift its business to GFT, which is in process of being acquired by Gain Capital (deal is expected to close later this year). While Tradefair can certainly shift all future business to GFT, there is no guarantee that all or even any of its current clients will terminate their trading accounts at LCG and move to GFT. Tradefair actually has a blurb on its home page which warns clients:
We are excited to announce that we are now partnering with GFT Global Markets UK Ltd (GFT Markets) to bring you a new service with enhanced tools, features and first class customer service that we believe will make your trading experience even better. Switch by no later than the 12th December 2013, as your existing Tradefair service will become inactive for new trades from that time.
The stock market was not enamored with the news — LCG shares dropped more than 7% on Tuesday, and have now dropped by 28% since the aforementioned disappointing 1H results were announced in late August.