A few things here.
First, this deal sucks for refcofx account holders. Had the creditors committee accepted FXCM's offer of $130 million, these people would have gotten all of their funds back. As it is, the only people who will get all their money back are those with less than $150 in their accounts presently.
Second, whatever your view on the benefits or drawbacks of this deal, it has yet to be approved by the bankruptcy court, and therefore it may not go through at all.
Effectively, Gain has paid for the right to get involved in a huge mess....and they stand to gain very little from it. It stands to reason that of the 10000+ customers with more than $150 in their RefcoFX accounts, a good chunk of them are pissed off and will never trade forex again. Another chunk of them will seek complete protection in the form of CIPF through a firm where the government backs all accounts (the only one I'm aware of is manfinancialfx.ca) if they want to continue trading with less risk of losing their money. Even if a few thousand of them decide to take Gain up on their offer, they will have to place a lot of trades for many months, if not years, to get back to their original account balances.
Gain has effectively written all RFXA clients a nice, sweet note that says "you can get a small amount of money from us for the right to earn rebates on your trades with us. Sorry if you had $100,000 or more in your RefcoFX account....here's $150!"
Anyone could have done this, but apparently Gain thought it was worth paying millions for it. What they get out of it is perhaps a few more accounts. What they lose is that they're basically giving all of those account holders the right to become IBs of Gain, sort of. These people--just like traditional IBs--get to earn "fat" fees in the form of rebates on trades, thus encouraging them to trade more.
The only problem with this is that, with 90% of retail FX traders being unprofitable as it is (according to some estimates), many of these people will inevitably end up being the ones coughing up thousands more dollars to stay in the game in the first place.
First, this deal sucks for refcofx account holders. Had the creditors committee accepted FXCM's offer of $130 million, these people would have gotten all of their funds back. As it is, the only people who will get all their money back are those with less than $150 in their accounts presently.
Second, whatever your view on the benefits or drawbacks of this deal, it has yet to be approved by the bankruptcy court, and therefore it may not go through at all.
Effectively, Gain has paid for the right to get involved in a huge mess....and they stand to gain very little from it. It stands to reason that of the 10000+ customers with more than $150 in their RefcoFX accounts, a good chunk of them are pissed off and will never trade forex again. Another chunk of them will seek complete protection in the form of CIPF through a firm where the government backs all accounts (the only one I'm aware of is manfinancialfx.ca) if they want to continue trading with less risk of losing their money. Even if a few thousand of them decide to take Gain up on their offer, they will have to place a lot of trades for many months, if not years, to get back to their original account balances.
Gain has effectively written all RFXA clients a nice, sweet note that says "you can get a small amount of money from us for the right to earn rebates on your trades with us. Sorry if you had $100,000 or more in your RefcoFX account....here's $150!"
Anyone could have done this, but apparently Gain thought it was worth paying millions for it. What they get out of it is perhaps a few more accounts. What they lose is that they're basically giving all of those account holders the right to become IBs of Gain, sort of. These people--just like traditional IBs--get to earn "fat" fees in the form of rebates on trades, thus encouraging them to trade more.
The only problem with this is that, with 90% of retail FX traders being unprofitable as it is (according to some estimates), many of these people will inevitably end up being the ones coughing up thousands more dollars to stay in the game in the first place.