REPORT: The Largest US Currency Broker Just Got A $300 Million Lifeline

Leucadia and FXCM have struck a $US300 million financing deal that will allow FXCM to continue normal operations, according to a report from CNBC.

Earlier on Friday, Bloomberg reported that investment bank Jefferies was in talks on a $US200 million deal with FXCM. Jefferies is a subsidiary of Leucadia.

The currency broker FXCM was down as much as 90% in premarket trading, and had been halted all day on Friday, pending news.

The report comes after Thursday’s shocking announcement from the Swiss National Bank that it would remove its currency peg against the euro, which sent currency markets into turmoil and saw heavy losses for numerous currency brokers.

In a statement Thursday night, the company said:

NEW YORK, Jan. 15, 2015 (GLOBE NEWSWIRE) — FXCM (NYSE:FXCM) an online provider of forex trading and related services worldwide, announced today due to unprecedented volatility in EUR/CHF pair after the Swiss National Bank announcement this morning, clients experienced significant losses, generated negative equity balances owed to FXCM of approximately $US225 million.

As a result of these debit balances, the company may be in breach of some regulatory capital requirements.

We are actively discussing alternatives to return our capital to levels prior to today’s events and discussing the matter with our regulators.

Earlier Friday, Business Insider’s Mike Bird outlined the problems facing currency brokers around the world following the surprising decision from the SNB.

As Bird outlined:

Brokers can go out of business on big moves like this because they give their clients access to leverage. For example, an account holder might have $US1,000 with the broker but hold positions worth $US10,000 in currency markets. That doesn’t matter so long as the holder’s losses are covered by the initial amount.

The market is still digesting the SNB’s actions and waiting for what happens next.

News from FXCM could one of the first shoes to drop.

More to come …

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