By Telis Demos
IronFX Global Ltd., an online brokerage that trades currencies
and other instruments, is working on a potential 2015 initial
public offering in the U.S., according to people familiar with the
matter.
The Cyprus-based company has filed confidentially for the
offering but likely won't launch the deal until next year, the
people said. The company may aim for a valuation of more than $800
million in the deal, the people added. It is working with banks,
including Barclays PLC, UBS AG and Credit Suisse Group AG on the
offering, they said.
An IronFX IPO would come as foreign-exchange trading volume
picks up after a long period of tepid activity.
Shares in U.S.-listed online-trading brokers have jumped in the
past three months, as volatility has increased across markets
because of divergences in central bank policy in the U.S., Japan
and Europe. Gain Capital Holdings Inc. is up 31% in that time, and
FXCM Inc. is up 15%. But both stocks are still well below their
highs reached in 2013.
IronFX offers trading in currencies, derivatives, stocks and
other financial products to small individual retail traders and
institutions, such as hedge funds. It operates in Europe, Asia, the
Middle East, Africa and Latin America.
If it succeeds in selling shares at a market value of more than
$800 million, IronFX would surpass FXCM and Gain Capital, which
have market values of roughly $790 million and $350 million,
respectively.
IronFX was founded in 2010 by Markos Kashiouris, who is chairman
and chief executive. The company now has more than 1,600 employees
and 60 offices globally, according to its website. It recently
became a sponsor of Spain's FC Barcelona soccer team.
Retail trading of currencies has grown sharply as online
brokerages have emerged. These brokers typically bundle many small
trades into large positions that they can offset in the
institutional market, charging small margins to their clients.
Brokers that cater to retail customers saw a 41% increase in
volume in 2013, versus overall currency trading growth of 14%,
according to research firm Greenwich Associates. About 98% of
retail trading is electronic, Greenwich said.
Europe is the largest market for retail currency trading, with
the U.K., France and Switzerland accounting for nearly 40% of
global retail trading in April 2013 in foreign exchange, a survey
by the Bank for International Settlements found.
Some global regulators have warned that retail trading of
currencies can be dangerous for small investors, especially because
they sometimes borrow money to make bigger bets, which can multiply
losses.
France's Autorité des Marchés Financiers warned in October that
"foreign exchange trading is a market that individual investors
should avoid." In 2010, U.S. regulators set limits on how much
individuals can borrow to trade currencies. The Commodity Futures
Trading Commission set a 50-to-1 borrowing cap for some currencies,
far less than the ratio of 200-to-1 or more at which traders in
other countries can sometimes borrow.
Write to Telis Demos at telis.demos@wsj.com
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