The FXCM/Leucadia bailout deal looked pretty heft coming with a 10% interest rate on around $279m but that will rise 1.5% quarterly up to a maximum of 17%. There will also be up to $30m in fees if the principle is not reduced to below $250m by 16th April, reports Forex Magnates
As far as I can tell from the comments on our news gathering page, there’s still been no decision whether FXCM will be forgiving negative balances. Given the terms of the bailout deal I think it would wise to think that this may not be happening and that FXCM will be making calls to recover negative balances. They’ve taken very expensive deal for this money and they will want to get that paid off very quickly and the most logical route would be to go after customers. That’s hardly likely to do them any good in the long run though as other brokers forgive losses to keep (and increase) customers.
The question remains as to whether they go after the full amounts through legal channels or try to strike a deal with customers of partial payments.
If you get any news then pop it in the comments here or in the news thread linked above. I’ll add this post to it also.
Update: Stock Market Wire have a few more details on the deal
The key points that I’ve highlighted;
The net proceeds of the loan (approximately $279 million) will replace capital in FXCM regulated entities to cover negative client balances and pay down outstanding revolving debt.
The credit agreement requires monthly payments of the term loan from proceeds received during the immediately preceding calendar month from accounts receivable related to the customer debit balances referenced above.
That says to me that they are looking to recover negative balances, but let’s wait until we get something from them directly
