FXCM (NYSE:FXCM), an online provider of forex trading and related services, priced its IPO on 1st December, 2010 at $14 per share, giving it a first day return of 6.1%.
Business Overview (from prospectus)
We are an online provider of foreign exchange, or FX, trading and related services to approximately 175,000 retail and institutional customers globally. We offer our customers access to over-the-counter, or OTC, FX markets through our proprietary technology platform. In a FX trade, a participant buys one currency and simultaneously sells another, a combination known as a “currency pair”. Our platform presents our FX customers with the best price quotations on up to 56 currency pairs from up to 25 global banks, financial institutions and market makers, or FX market makers, which we believe provides our customers with an efficient and cost-effective way to trade FX. We utilize what is referred to as agency execution or an agency model. When our customer executes a trade on the best price quotation offered by our FX market makers, we act as a credit intermediary, or riskless principal, simultaneously entering into offsetting trades with both the customer and the FX market maker. We earn trading fees and commissions by adding a markup to the price provided by the FX market makers and generate our trading revenues based on the volume of transactions, not trading profits or losses.
Offering: 15.1 million shares at $14 per share. Net proceeds of approximately $197.1 million wil be used to purchase newly-issued Holdings Units from FXCM Holdings, LLC and approximately $147.4 million to purchase Holdings Units from existing owners.
Total revenues increased 6.5% to $264.2 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009...Total expenses increased 5.3% to $181.3 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009...Net income increased 16.2% to $79.4 million for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009...
The retail FX trading market is fragmented and highly competitive. Our competitors in the retail market can be grouped into several broad categories based on size, business model, product offerings, target customers and geographic scope of operations. Competition in the institutional market can be grouped by type, technology and provider. In the U.S. market, our primary competitors are Gain Capital Holding LLC, Global Futures & FX, LLC and OANDA Corporation. They are well capitalized, have their own technology platforms and are recognizable brands. All of these firms operate using the principal model. We also compete with smaller retail FX brokers such as Capital Markets Services, LLC, FXDirectDealer, LLC and InterbankFX, LLC. These firms, to date, have not been our core competitors due to their smaller size, technology and marketing limitations. With the exception of InterbankFX, all of these firms operate using the principal model.