Who will bid for Gain Capital?
CMC Markets, the United Kingdom brokerage, has reached a market cap that has doubled Gain Capitals. CMC is now the leading broker for the UK, and it’s been rumoured that they’ll be purchasing Gain Capital. There have been multiple brokerages that have felt the adverse effects of the product intervention measures implemented by the European Securities and Markets Authority. One of those brokerages is Gain Capital, who is facing acquisition rumours.
Considering that CMC Markets is the biggest competitor to Gain Capital. If the brokerage is looking to be acquired, CMC will most likely purchase Gain. However, multiple other firms could be buying Gain Capital in the coming months.
Jefferies, the brokerage responsible for saving FXCM, could be entering the retail forex market. Though this is unlikely, Jefferies is the only company other than CMC Markets in the blockchain space that can afford to purchase Gain Capital and integrate the company as a new subsidiary.
Before the acquisition rumours began, Gain Capital was trading at an all-time low. The reason for this is because a three-year renewal contract under the poison pill strategy just ended three months ago in April 2019. Jefferies could become the largest brokerage in the United States in the FXCM Space. Combining their expertise with the Gain Capital & Forex.com brands will allow for their trading volumes to jump dramatically. However, there hasn’t been any confirmation as to if Jefferies will purchase Gain Capital
- Australia: Australian brokerages have had profits jump dramatically in the last twelve months. The ESMA’s product intervention measures caused for numerous European investors and traders to flock to offshore brokerages in the land down under. This is due to the loose policy on leverages permitted by Australian officials. Sources close with Gain Capital have indicated that three Australian brokerages are looking to expand their jurisdictions to the United States. By purchasing Gain Capital, these unnamed Australian brokerages could enter the US market, which maintains a 50:1 Leverage.
- China/Russia: Russian and Chinese Brokerages could be looking into purchasing Gain Capital as well. The chances of this happening are slim to none, with the sources indicating these Chinese & Russian Brokerages most likely being false. Theoretically, Gain Capital could be sold to an unnamed and unlisted brokerage from a communist regime. However, considering that both communist governments oppose blockchain technologies, the likelihood of a deal being permitted legally is nearly impossible.
- A Secret Investor: The market conditions for Gain Capital have been complicated since the ESMA launched their product intervention measures. The revenues for the company have dropped dramatically in this period. Instead of selling their company to another brokerage, Gain Capital could be attracting a new large investor. The potential of a new investor hasn’t been confirmed by the brokerages yet. However, the indication that a long-term investor has betted on the future of the company is strong with the share prices jumping dramatically. Gain Capital hasn’t confirmed any of the scenarios mentioned above, choosing to remain quiet.
Just a Rumour
All traders and investors need to remember, at the end of the day, this could merely be a rumour. Any given day in the market will have new rumours circulating, which is most likely what the acquisition of Gain Markets is, a false rumour. Neither Jefferies nor CMC Markets or Gain Capital have confirmed any of the rumours indicated above. Even though a hostile takeover of Gain is possible, it’s unlikely. There is a considerably higher chance that the firm is taking on a new investor to fight back against the product intervention measures.
CMC Markets hasn’t been the only brokerage to feel the effects of the product intervention measures. Almost every firm in the European Union saw lower trading volumes and lower profits. This includes CMC Markets.