The Forex market deals with tens of billions of dollars each day, and the bigger the market, the better the opportunities both for brokers, and for traders. In this fast moving environment, some of the biggest brokers decided to go public, with Initial Public Offering (IPO) on London stock exchange or on other exchanges.
This move, initially meant to raise investments in that specific broker, and to give them access to liquidities, has another very important quality, one that is beneficial first and foremost for traders: transparency.
With the listing, come a lot of legal obligations for the broker in the reporting area. And the watchdog of each stock exchange has its eyes on all listed companies and their practices, to make sure investors are protected, the overall business is legit, and the investments are protected from any potential wrongful doings from the part of the listed brokers. While most of them listed on secondary markets, the rules of transparency and regulatory dispositions do apply.
We found several such brokers on stock exchanges around the world, as some of them best Forex brokers in the world decided to undergo an IPO.
IPOs with tens of millions investments
Besides the money in the pocket for the owners, the amounts gathered through these IPOs say a lot about the credibility and the trust of the market in these brokers that decided to become public. So, let’s look at a few of them and see how they did on stock exchange markets and what happened after they listed.
A popular IPO was that of Plus500, broker that went public in 2013, with an IPO on AIM (Alternative Investment Market) on London Stock Exchange (LSE). Well, they got USD 75 million from the IPO, having a market capitalization of USD 200 million.
And it would have get even better when Playtech offered USD 703 million for Plus500, two years later, but the transaction didn’t receive the necessary authorization and it fell through. The listing, however, brought them a fine from FSA (the regulatory authority in UK) for failing to provide reports, in May last year. Since then, however, no other such fines occurred.
Another famous IPO was that of FXCM, that went public on New York Stock Exchange, raising USD 211 million, back in 2010. But this didn’t come easily. One year later, FXCM got slapped with a class action lawsuit for alleged fraud and racketeering, and misleading investors in the very IPO.
The broker got a USD 2 million fine from NFA, for slippage malpractice and another USD 6 million from CFTC, and they had to restitute USD 8 million to customers.
In its turn, Gain Capital tried to go public in 2010, again, on New York Stock Exchange. However, things didn’t go as planned, as they didn’t reach the expected price, and the IPO was withdrawn. 2010 was not a good year for Gain Capital, as they got a fine from NFA (National Futures Association) for allegedly slippage practices.
Going to Europe, XTB had an IPO this year, getting USD 49 million for their 14% of the shares on Warsaw Stock Exchange, putting the market capitalization at about USD 350 million. While the USD 49 million they made is a significant number, this is in the low side of the expected result, as the shareholders hoped for a much larger USD 400 million maximum.
No matter the amount owners received for the listed shares, the actual listing offers investors, or should offer, transparency and increases the credibility of the respective broker, should it play by the rules.