Citi: Strategic Growth Still Ahead for FXCM

In a research report published earlier today, Citi says FXCM FXCM must take on three tactical issues in the future. According to Citi, these issues are, “1) Management indicated white label deals have pushed into 2Q due to timing delays but should close shortly with faster uptake relative to ETFC contract; 2) while management painted strong M&A pipeline, they did indicate a smaller sized opportunity fell through but still see a few $30M+ EBITDA contributive deals in addition to some smaller opportunities; and 3) potential adverse $30M regulatory capital hit due to segregated account legislation post MF Global – though a) funded from cash and b) likely accelerates deal flow with still ample B/S liquidity. Here, the $30M is management's conservative view and seemingly sharply higher than conjectured by industry participants, as we understand.” Citi maintains its Buy rating on FXCM, which closed yesterday at $13.45.