So, Do You Want to Own a Broker ? : FXCM going public on NYSE

As the forex industry grows it is not surprising to see that the companies start to get bigger and bigger with some of them being as big as companies on many manufacturing industries around the world. A natural consequence of growing a company to a large size is the entering of the stock market to increase capitalization and “share the returns” of your business amongst interested investors. Up until now there isn’t a single forex broker on the New York Stock Exchange (NYSE) or any other large exchange (to the best of my knowledge) but some industry giants have become extremely large and it was just a matter of time before they started to enter the world of stocks. The first broker to venture into this scenario will be FXCM. On today’s post I will talk about this new step for FXCM, what it means for the forex world and what information and investment opportunities are likely to arise from this venture.

Within the world’s stock exchanges you can find opportunities to “own” a part of a company of any market sector you want. You can get companies in energy, pharmaceuticals, internet searching, electronics, etc. However, a big exception up until now had been forex brokers, with none of them being listed under the world’s most traded stock exchange (the NYSE). With the industry almost growing ten times in size since the beginning of the decade, it becomes interesting to see that some of this brokers now have the necessary capitalization and value to offer shares within the NYSE. The first broker to do this will be FXCM.

During the past few weeks, FXCM has filed with the NYSE for an IPO seeking to gather at least 200 million in capitalization. The companies net worth was estimated at one billion dollars and the stock will probably start trading somewhere around 13 to 15 USD. Looking at the way in which the forex industry grows and knowing from its heart that this growth isn’t slowing any time soon, it becomes obvious that this is a good investment opportunity, for most of us in an industry we know for good. If you want to own part of one of the biggest world brokers, then this might be a good opportunity to do this.

This step is not only important to FXCM but to the whole forex world – especially brokers – because it will show them how good or bad it is to “go public” with their companies. Depending on how FXCM does with their business many other large brokers may “take the step” and start going into the NYSE to gather some additional funds. If FXCM does very good then it wouldn’t be surprising for Oanda, Alpari and other large brokers to follow their steps to gather funds and expand their forex business.

Another very interesting effect of this new stock is that we will be able to gauge the effect of forex news as well as CFTC regulations on the forex broker industry. Watching the FXCM stock could provide us with some idea of what happens to brokers whenever a given regulation is enacted in the US. We could also watch the effect of other important events such as quantitative easing and their “not so predictable” effects on the broker industry. The new stock will provide a guideline to judge how certain events affect forex trading and how vulnerable the broker industry will be to global risk aversion, etc.

Definitely this new public offering by FXCM is extremely interesting and I can guarantee that all people in the industry will keep their eyes on the FXCM stock and how successful their plans to get capital and expand their business through entering the stock world will be. If FXCM has a lot of success then it might be expected for other brokers to go into the stock trading arena to get their “chunk” of public market capitalization. For FXCM, the plans seem to be to expand further into Asia and Europe, attempting to increase their non-US customer base, apparently in order to shield themselves from future destructive CFTC regulations. So if you want to own a broker, this might be a very good chance :o).  Note that the day the stock will start trading is till not known as the symbol (FXCM) still needs to be approved.

If you would like to learn more about my journey in mechanical trading and how you too can trade using mechanical systems to achieve long term success please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach to automated trading in general . I hope you enjoyed this article ! :o)

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