FXCM Increases Margin Requirements

FXCM Inc. said it would increase its margin requirements for foreign-exchange products globally, as well as gold in overseas jurisdictions, pointing to currency volatility that the foreign-exchange broker said could roil markets throughout this year.

The decision, which is effective Wednesday, raises the amount of collateral investors must provide upfront as a percentage of any trade and comes after foreign-exchange brokers like FXCM were hit hard after the Swiss National Bank moved last week to stop reining in the value of the franc against the euro.

FXCM on Friday accepted a $300 million, two-year loan from Jefferies Group LLC parent Leucadia National Corp. to cover client losses stemming from the decision.

In Wednesday's statement, FXCM said it believes there is a high level of uncertainty in the currency markets that could destabilize markets throughout 2015. It specifically pointed to the ECB rate decision on Thursday and the Greek Election on Sunday.

"FXCM would like to reiterate that trading on FXCM's systems continues in the normal course of business," said Drew Niv, CEO of FXCM. "It is important to stress that FXCM isn't insolvent, has not filed for any form of bankruptcy, and is in compliance with all regulatory capital requirements in the jurisdictions in which it operates," he added.

Brokerage Interactive Brokers Group Inc. also said Tuesday that it expects to increase margin requirements. The firm said clients lost about $120 million on Thursday after the franc surged against the euro and other currencies. The broker is unlikely to recover those losses, Chief Executive Thomas Peterffy said.

Write to Tess Stynes at [e-mail]

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