As the forex trading platform expands its capacity for handling currency derivatives, FX Alliance Inc. has filed plans for an initial public offering of up to USD 100 million in stocks.
The company is adding staff and building technology to handle transactions in complex foreign-exchange options and other market functions, spurred by regulations designed to tighten trading practices in derivatives.
FXall, as the firm is known, already ranks among the biggest electronic trading venues for financial institutions to buy and sell cash currencies. It counts banks, asset managers and corporate treasurers among its clientele in the global currency markets, where an estimated $4 trillion changes hands per day.
According to documents filed with regulators Monday, FX Alliance recorded revenue of $57 million in the six months ended June 30, a 15% increase from the same period a year earlier. Profit for the period edged up 0.9% as operating expenses increased.
FXall already trades some currency derivative products like non-deliverable forwards, but the Dodd-Frank financial law is expected to open up more such markets to competition by requiring more contracts to be traded on regulated platforms known as “swap execution facilities.”
Phil Weisberg, chief executive of the company, has said FXall intends to register as such a SEF when regulators detail the platforms’ parameters.
FXall was founded in 2001 by a consortium of Wall Street banks, which hold massive sway over daily currency dealing. In 2006, private equity firm Technology Crossover Ventures bought a minority stake for $77.5 million.
For daily forex trade, FXall competes with larger platforms like the EBS venue run by Icap plc (IAPLY), last month reporting an average $186.9 billion traded per day on its systems. Thomson Reuters (TRI) handled a little more than $166 billion per day.
FXall doesn’t regularly release volume figures. In August the firm reported that its business set a single-day record of $140 billion traded on July 27, with second-quarter trading activity rising 37% over the same period in 2010.
Bank of America Merrill Lynch, Goldman Sachs Group (GS), Citigroup Inc. (C) and JP Morgan Chase & Co. (JPM) are signed on as joint bookrunners for the offering, according to a statement from FXall Monday.
Source : Dow Jones
