Forex industry news
website, leaprate.com, is reporting that that, contrary to earlier reports, the
Worldspreads technology platform has not been sold to ETX or any other party.
Additionally, the
foreign currency site clarifies that the 15,000 Worldspreads client list with
5,000 active traders would usually be worth between $500,000 and $2m and
therefore creditors facing a shortfall will want to see it sold. KPMG’s current
reported stance is that there are no plans to sell it. This may change when a creditors
committee is formed and tries to ensure returns are maximised.
In further related news
it was announced recently that Jim Hamilton of BDO's
Dublin, Ireland office was discharged as receiver and manager of WorldSpreads. Some clients were confused and somewhat
perturbed by this resignation. The explanation is simple and no cause for undue alarm; because there are no imminent
asset sales then Mr. Hamilton’s role is redundant. This action is in line with KPMG's earlier prompt measures in which Worldspreads staff were made redundant.
Meanwhile, clients await some key
information; a date for the return of sums up to £50,000 from the FSCS, information from
KPMG on the amount of remaining funds available for distribution and some confirmation
that media reported police investigations are progressing.
it seemed unlikely that ETX was a buyer
ReplyDeleteRumors go around that ETX will get WS client credit their accounts and let them trade giving authorisation to ETX to retrieve the funds (if and when...)It sounds crazy but what do you think?
ReplyDeleteDont know what you mean.
DeleteRe. 11.14 a.m comment. I think the poster means the rumour is that ETX is still interested in buying. Perhaps there could be some scenario whereby FSCS pays the up to 50k compensation. KPMG distributes amount of remaining client funds to 50k plus clients. ETX then pays shortfall for right to client list, technology platform and right to any further funds recovered and right to take legal action itself to recover shortfall. No idea if it is possible but, potentially, it might not cost them a lot.
DeleteAfter all FSCS and remaining client funds will cover most of the shortfall. ETX having supposedly been in there with the FSA will have a clearer idea than most of what funds are still there recoverable. Sounds like an unlikely rumour but, looking at it logically, maybe it's not so wild.
Problem is that the FSCS pays out up to £50k to the client and then takes over the right to the KPMG payment for those clients. So the FSCS gets paid by KPMG out of the pot whatever percentage is recovered. The scheme doesnt work the way you imply (i.e KPMG pays clients above £50k and the FSCS pays those below). KPMG has to treat all clients equally, the FSCS just takes over their claim and recieves a payment from KPMG.
DeleteSo ETX cant make up the shortfall without plugging the entire cost, which is effectively a full takeover, and if they were going to do that they already would have given the fees already accumulated from KPMG/lawyers etc over the past two weeks.
Suppose 60% of client funds are eventually recovered net of fees. All accounts (big or small) will receive 60% of their claim from KPMG. For accounts below £50k where the FSCS has already paid 100% of the claim the FSCS will get the 60% recovery but will lose the 40%. So the FSCS is going to lose money. It may make sense for it to use that same amount of money to support a buyer.
DeleteGood idea in theory but remember that the FSCS is financed by the Industry to compensate clients of a failed company. I dont know how your idea plays out with regard to getting industry agreement to subsidise a takeover.
DeleteJust Googled Conor Foley.
ReplyDeleteI guess he isnt the Humanitarian Aid worker Conor Foley, or has the guy who trousered my wonga just found God?
$500,000 - $2m for 5000 active clients?
ReplyDeleteThey must be mad. Given they have taken so long, i'd say the vast majority (minus whose haven't given up spread betting altogether) have accounts elsewhere.