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And the early results are very promising and if you look at that how it’s going, we may end up with some additional switches and new clients coming into our market. And then the other part of it is besides the spend is the conversion optimization. The chart on the left on Slide 14 shows the breakeven on our marketing investment. Here, we’re looking at the breakeven for the first period of increased marketing spend, which was the second half of last year 2018.

The way we monetize our business is pretty simple. We want traffic over our financial network that generates transactional revenues for us, either in the forms of commissions or spreads. We have a very scalable platform now to all of these markets, and we are looking for ways to gather more flow across that network. And clearly, the Gain transaction helps trade 360 review us with that. GAIN Capital FOREX.com Australia Pty Ltd. (doing business as FOREX.com Australia), a subsidiary of StoneX Group, Inc., is a company headquartered in Sydney, Australia, that provides online foreign exchange trading services. There are different types of holding gains and the types depend on the accounting system the company uses or may use.

So just to summarize on the next page, headed Transaction Rationale. I think we’ve covered some of this, but the most obvious thing is it increases our net operating revenue or the merged entity by 30%. We obviously increased our customer balances by $1 billion to $4 billion. And whether it’s equities or crypto or whatever it might be, you can have the platform and you can have your customer relationships of the product, the infrastructure and the underpinning is an important part of it. So to me, being able to tap into, and I use the word ecosystem because I think that’s exactly what Sean and his team have built.

  1. During the fourth quarter, net proceeds from the GTX sale helped fund our Dutch auction under which we repurchased almost 6.4 million shares of common stock at $7.84 per share.
  2. Just to finish up on the Gain FCM side of the business, they also – the other part of their FCM is focused on both IBs and professional traders.
  3. And then you can see, on a merged basis, what that does to holdco debt-to-EBITDA.
  4. That represents about a 12% premium to the tangible book value on a diluted basis as at the end of Gain’s financial year.
  5. So instead of having to take that traffic and send it out externally, we’re going to take that traffic and send it internally.
  6. But I suspect just a greater flow that in same products that you can naturally offset internally is just going to stabilize that to a greater degree.

GAIN Capital Holdings, Inc., together with its subsidiary, provides trading services and solutions to retail, institutional, and futures service customers worldwide. The company operates in two segments, Retail and Futures. It specializes in over-the-counter (OTC) and exchange-traded markets. It provides services to retail customers through FOREX.com and Cityindex.com, as well as through brokers and white label partners. The company offers execution and risk management services for exchange-traded futures and futures options on the United States and European futures and options exchanges; and online trading services.

And if you look at the far right, that’s how we go from a current 15% ROE to a 20% ROE in a fully synergized year-two basis. I would just like to draw your attention to the bottom chart there. So that’s where we’ve overlaid Gain’s revenues on to ours, and we exhibited 18% quarterly volatility on a combined basis that gets reduced to 13%. So perversely, or maybe logically, adding a another volatile product to a broader portfolio actually creates a better result. So there is certainly a kind of a little overlap between those customer groupings.

GCAP GAIN Capital Holdings, Inc.Stock Price & Overview

Warren Buffet 101 is our kind of North Star here at INTL. We believe if we do that, we’ll become a bigger company. And if we do this right, on the fully synergized year-two basis, this could get us to above 20%. And I don’t think there’s a financial business out there who is in the sort of clearing and execution side of the business that is able to achieve those kind of returns. And a lot of that had to do with expanding our technology, doing a lot of proprietary work to be able to do things in real-time, its 24-hour market for foreign exchange, in particular, and then start to fold in other markets as they made sense. We’ve just reached $1 billion in operating revenue.

Because in many instances, we either have similar flows, we are sometimes a market maker in some of the products they have or we are the clearer. Tax-conscious mutual fund investors should determine a mutual fund’s unrealized accumulated capital gains, which are expressed as a percentage of its net assets, before investing in a fund with a significant unrealized capital gain component. This circumstance is referred to as a fund’s capital gains exposure.

And even modest upticks clearly can change the profile. On the foreign exchange side, we have a foreign exchange prime brokerage business. But we do something like $2 billion a day in foreign exchange. When you combine those flows, you end up crossing more spreads, we combine prime brokerage arrangements, we end up lowering costs. So there’s a lot of potential synergies in just combining the flows, crossing spreads or using our infrastructure to enhance margins on their current business.

GAIN Capital Holdings, Inc. (GCAP) CEO Glenn Stevens on Q4 2018 Results – Earnings Call Transcript

Looking to avoid the hassle of mudslinging, volatility, and uncertainty? You’d need to be out of the market, which isn’t viable. Berkshire Hathaway stock over the past 20 years has almost precisely equaled the return of the S&P 500. Tax-free accounts can include Roth IRAs and 529 plan college savings accounts, among others. Tax-deferred accounts include traditional 401(k) plans and traditional IRA accounts, among others. Yes, I think that’s the right way of thinking about it, certainly, Kyle, as much as — the fourth quarter was the first full quarter, and so yes, I think, that’s a fair way of looking at it.

You’re still going to be subject to tailwinds and headwinds of pockets of vol are not. If you look at the vol in Q4, that was pretty concentrated to quite a small amount of time to the bulk of Q4. I don’t believe particularly even in equities or in currencies we had that kind of movement. It was pretty concentrated to the back end of Q4, as a matter of fact even maybe a couple of weeks. So it terms of saying that, hey, what happened even though you had less volatility in Q4, I’m not sure I would say that, that necessarily described the whole quarter.

GCAP GAIN Capital Holdings, Inc.

And that’s why we put the model in to show that’s the whole reason for adding the model with the additional marketing spend to show what our expectations are, as this will play out for our financials. Well, the impact is done on a go-forward basis, yes, because the recharacterization of all those clients was done prior to the August 1 regulation change. So it’d be a step function down, if you will, and then this is your new baseline. And that baseline has been established since August 1. So to some degree if we’re 5, 6 months past that date, expectations are this is kind of the new normal in that market.

And so in considering strategic alternatives and trying to do the right thing for our shareholders, all the – the whole opportunity set has to be built in. And I also think that if you go back a year ago or more, you have to do this comparison to say, do a risk-adjusted potential for the future. So I think we addressed that to some degree, just being able https://forexhero.info/ to have a much broader offering to our existing clients and to clients we don’t even serve yet. So I guess, I would just maybe simply answer that by just saying that’s the potential benefit and the beauty of all the capabilities that INTL’s already got in place. And then our ability to deliver those capabilities with the pipe and direct to customers.

So he brings a lot of flow to us, and I think we can take that flow. And I think we can monetize that flow better through high financial networks than Gain can as a stand-alone. But very hard for me to give you specific revenue numbers at this time. So I’m not so sure that – so the sort of let’s just stay the way we are and wait for volatility to come back would necessarily be the best outcome for Gain shareholders.

INTL FCStone to acquire GAIN Capital in $236M deal

And if you’re following along, I will skip by the disclaimer. Just to run through this, we have agreed to acquire Gain for $6 a share in cash or approximately $236 million for the equity. That represents about a 12% premium to the tangible book value on a diluted basis as at the end of Gain’s financial year. I would absolutely echo the excitement part of your sentiments. I think myself and our team are really looking forward to leveraging all the capabilities and infrastructure that INTL FCStone has put into place over the years.

For example, if you own stock that goes up in price, but you haven’t yet sold it, that is an unrealized capital gain. I guess, one is just to understand the cost synergies, capital efficiencies and some of the incremental revenue opportunities that you outlined. But with respect to the core organic growth and the Gain retail business, volumes in the past few or five years have been pretty challenged. And I think partially cyclical as you’ve outlined, but there’s also been some regulatory headwinds. If we assume that the cyclical FX volatility doesn’t come back, I’m just wondering how this combination really will help to kind of reverse or enhance the organic volume growth that we’re seeing in Gain’s FX and the CFD business. Then, of course, all the things we’ve mentioned, the kind of synergies on the flows, building our Gain’s client base and indeed, any increase in the volatility are kind of all upside opportunities for us.

We have some kind of rough numbers there on the slide about our net revenue mix. And you can see that it’s primarily an FX-driven retail business. There is non-FX part of it as well that we’re hoping to expand and continue to push, particularly, outside the U.S. market.

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