Refco FX Next on Block

Refco FX Next on Block

WSJ.com:


NEW YORK —Forex Capital Markets LLC, a six-year old futures brokerage firm, plans to bid for Refco FX Associates, a foreign currency brokerage unit of the bankrupt Refco Inc. (RFXCQ), an FXCM executive said.

“We will submit bids for all or part of the assets of Refco FX,” said Drew Niv, chief executive of FXCM in a phone interview. “There are lots of different parts to the company, and we are still trying to figure it all out.”

The unit isn’t part of the regulated futures brokerage businesses that Refco and its creditors committee are auctioning. Bids for those businesses are due at 4:00 p.m. EST on Nov. 4. Refco is selling those units to raise cash, and sales of other units would increase the funds available to repay creditors.

Niv said his firm licenses software and support services to Refco FX Associates, which trades currency futures for retail customers in what is known as the over-the-counter market. It has about 15,000 clients, whose accounts were frozen as part of the unit’s bankruptcy filing on Oct. 17, Niv said. FXCM company has about 80,000 clients.

Greenhill & Associates, which is advising Refco on its bankruptcy proceedings, has been soliciting bids for a variety of Refco businesses in whole or in part. At least one foreign bank also is interested in the retail currency brokerage unit, said two people familiar with the bankruptcy proceedings.

Niv said there are other foreign currency trading businesses for retail customers spread throughout various parts of Refco. “We started out wanting the entire FX business, but it became clear that it’s too dispersed, and we’re having trouble finding people at Refco to give us information.”

He said he believed the foreign exchange assets could be sold in a few weeks, unless bidders agree to acquire them along with the regulated units, which deal with contracts traded on futures exchanges.

In freezing assets of the currency unit, Refco’s creditors have “essentially destroyed” the trust of customers in the unit, Niv said.

“We will not be buying a continuing business, because it is utterly worthless, but we do want the accounts,” he said.

A spokeswoman for Refco declined comment.

 

Man, REFCOFX pulled a number on me. They only have 15000 accounts. I thought they were bigger than that.

Or did everyone else get into the FXCM life boat while the rest of us was still in the water.

It seems like those of us with REFCOFX accounts are treading water, and FXCM is the Coast Guard trying to save us.

 

I read that during the early days in October when the news was first breaking account holders withdrew half of the money in Refco accounts. Something like 4 billion of 8 billion was taken out. There was only about a 3 day window for this.

In the future I will have my withdraw form ready to fax at all times.

 

Ya. And I'm going to monitor the company I trade with via News Email alerts.

I didn't hear that REFCO was in trouble until it was way to late.

I guess that's what I deserve, since before all this I was in my own little trading world, buying and selling based off my signal strategy, never really talking to anyone via a forum or anywhere else about trades are the company I was trading with.

I personally don't know ANY FOREX or FUTURE traders. I know a few people that trade stocks. But all the people I know never even heard of FOREX.

 

Forex is fairly new for the retail investor. I just registered a forex domain which will have basic info on forex trading and Google Adsense ads for revenue. My present site brings in $150.00 per year from Adsense for a very obscure topic with maybe 40 pages hits a day. Forex should bring in many times more for me.

I have learned a lot since April for maybe 5 pages worth of stuff. As a RefcoFX customer I have learned even more.

 

That was in yesterday's edition of the WSJ or it was on the website wsj.com or both?

 

I checked and did not see it yesterday on wsj.com. I did a word search, too, which did not pull it up. So maybe it was in the print edition. Interesting part of the quoted material: “'We will not be buying a continuing business, because it is utterly worthless, but we do want the accounts,' he said." Does that suggest all the assets of RefcoFX including customer money are gone?

 

No.

What will probably happen is that REFCO FX will declare chapter 7, similar to REFCO LLC.

The accounts will then be transferred to FXCM, and the rest of the company liquidated.

Remember, this company doesn't have anything else worth value except customer accounts.

REFCOFX is a company with a few employees that is renting space right next to each other. (Check out FXCM's and REFCOFX' addresses, this is actually quite common in bussiness)

In fact, I've often wondered if they are using the same office and the same employees.

Therefore, a simple buy out of REFCOFX by FXCM makes the most since. REFCOFX will probably declare chapter 7, getting rid of any and all debt, and FXCM will receive the the old REFCO account that they probably already today actually manage.

The above make the most since. That is, if REFCOFX doesn't have huge debt. (Which I doubt)

Even then, the Judge may say the accounts are REFCOFX property, but the money within the account isn't. That's why the account are being sold. But the buyer doesn't get the money in the accounts. He just get the customers.

 

I think you are correct.

Btw, what date did that WSJ article get published and where was it published. Please let me know.

 

This is what I figured might happen, FXCM takes over the RefcoFX accounts without the money.