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Foreign Exchange

Another one bites the dust as FXCM’s growth continues

Forex Capital Markets has reached an agreement to acquire certain assets of Hotspot FX’s retail business, Hotspot FXr. The decision is believed to have been a factor in the recent departure of Mike Williams from Hotspot, where he was senior managing director of Knight Capital, Hotspot’s parent. Knight will continue to run its institutional Hotspot FXi platform and integrate it into its electronic businesses.

Consolidation in the US retail market is picking up pace following the latest hike in capital requirements, which came into place on January 17. Retail operators must now have a minimum of $15 million of net adjusted capital set aside, and this will rise to $20 million in May. FXCM, which is extremely well capitalised when compared with most of its peers, has been swift to take advantage and sought to embark on a rapid growth-through-acquisition programme.

Drew Niv, FXCM’s chief executive, naturally says the deal makes sense for Hotspot’s retail clients, who will continue to trade in what looks like an ECN-environment. "Hotspot FXr is a major innovator in the field of fair and transparent pricing. While the retail clients of Hotspot FXr will be moving to a new platform, they will continue to receive pricing that is free of influences from the dealing desk...

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