From the March 01, 2009 issue of Futures Magazine • Subscribe!

Consolidation hits FX

Prompted by aggressive new capitalization requirements and the threat of greater regulatory oversight, consolidation in the forex market continues, most recently with FXCM’s acquisition of the U.S. retail client bases of Hotspot FXr LLC and ODL Securities Inc.

“The consolidation in the industry has given us the opportunity to acquire high value clients from other firms,” says Marc Prosser, FXCM’s CMO. “Everyone is running for the hills. CMC Markets closed down their U.S. operations. AC Markets closed down their U.S. operations. Both of those were U.S. regulated operations. CMC is the largest retail brokerage in the UK. ODL is a large, prominent UK firm. AC is a big Swiss forex company. It’s very expensive to do forex business in the U.S. from a capital perspective.”

According to ODL, the sale was prompted by new and more complex regulatory rules, including increased capitalization requirements.

“This has been a hard decision for us to make. ODL Securities Inc. is a very successful and profitable operation, but we could not justify disproportionately supporting one of our smaller subsidiaries,” Graham Wellesley, ODL CEO, noted in a release. ODL intends to open offices in Turkey and Australia and expand operations in Japan and Canada.

Pending regulatory approval, Hotspot FXr and ODL Securities were scheduled to be transferred to FXCM in February.

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