Recent Swiss Franc Volatility
- Thread starter Enivid
- Start date
- Watchers 2
Rescue ?
As you probably know by the time you read this post Jefries has rescued FXCM with a $300
million dollar "loan" that covers their equity shortfall and provides sufficient working capital for them to continue operations .The problem is that FXCM does not generate, according to their public filings, sufficient free cash flow to service the debt . They will either have to sell assets, raise more equity,or default giving back the remaining assets to Jefferies.In which case Jefferies wll have FXCM Plus their $300 million (or whatever is left of it) back.Good for Jefferies, not so good for traders.
As you probably know by the time you read this post Jefries has rescued FXCM with a $300
million dollar "loan" that covers their equity shortfall and provides sufficient working capital for them to continue operations .The problem is that FXCM does not generate, according to their public filings, sufficient free cash flow to service the debt . They will either have to sell assets, raise more equity,or default giving back the remaining assets to Jefferies.In which case Jefferies wll have FXCM Plus their $300 million (or whatever is left of it) back.Good for Jefferies, not so good for traders.
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Why "not so good for traders"?
BTW, I don't think that FXCM will have problems financing that debt (unless they see a massive revenue cut due to customers run). If not enough revenue can be freed from other spending articles, they can sell some of their shares to finance that debt.
Not so good for traders.
"Not so good for traders" because it means future turmoil in the Forex Industry and possibly closer and more intrusive fed regulation, neither of which are helpful and can be limiting to individual traders and costly to broker/dealers.(and therefore their customers as well)
"Not so good for traders" because it means future turmoil in the Forex Industry and possibly closer and more intrusive fed regulation, neither of which are helpful and can be limiting to individual traders and costly to broker/dealers.(and therefore their customers as well)
Perhaps, tighter regulation in form of lower leverage for some currency pairs would have prevented these FXCM's problem.