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WIKI ANALYSIS
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This company completed an initial public offering (IPO) of its stock in 2010. View articles that reference this company. Recent IPOs: Globe Specialty Metals • LogMeIn • Invesco Mortgage Capital • Medidata • Chemspec |
FXCM (NYSE:FXCM) provides an online platform to conduct foreign exchange (FX) trades. The company provides Over the Counter (OTC) FX service to over 175,000 customers, both retail and institutional. FXCM allows its customers to trade the best price offered by 25 different banks on 56 different currency pairs. The company uses the agency revenue model, which makes money by charging a markup on the price of each trade. This means that the company's revenue is not dependent on whether the customer makes a profit or loss, only on the volume of the transactions.[1]
FXCM's revenue model is different from most of its competitors, most of whom use the principal model. The principal model consists of the institution offering a price for a currency pair and making money by taking the other side of the transaction. This creates an inherent conflict of interest since the institution has a disincentive to find the lowest price, but rather a higher price so it can take a larger margin off the other side of the transaction. FXCM believes that its agent model assures its customers that there is not conflict of interest and that they will be given the best possible price.[1]
FXCM believes that the FX industry itself will continue to grow. FX trades have historically not been available to retail investors, but since approximately 2000, retail activity has risen by a compounded annual growth rate of 37%. FXCM believes that as retail investors become increasingly familiar with foreign exchange, the market will continue to grow. In addition, unlike the equity markets, foreign exchange markets are open 24 hours a day 5 days a week. [2]
The company's initial public offering of stock on the NYSE occurred on December 1, 2010. The company offered 15.06M shares each for $14. This was within the initial price range of $13-$15. The IPO raised a total of $211M. The lead underwriters of the deal were Credit Suisse Group (CS), J P Morgan Chase (JPM), and Citigroup (C).[3]
FXCM's total revenues remained essentially flat from 2008 to 2009 rising by $90K from $322,640K to $322,730K. However, the company's net income fell by 28% from $120M in 2008 to $87M in 2009.[4]
References
- ↑ 1.0 1.1 FXCM S-1/A 2010 PROSPECTUS SUMMARY "Our Business" pg 1
- ↑ FXCM S-1/A 2010 PROSPECTUS SUMMARY "Retail FX industry" pg 2
- ↑ Renaissance Capital - IPO Home "Online currency broker FXCM prices IPO at $14, midpoint of the range" 1 Dec 2010
- ↑ FXCM S-1/A 2010 PROSPECTUS SUMMARY "Our Business" pg 1
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