06 June, AtoZForex, London – The Forex industry is known for the many mutations in a fast paced environment. An example of which is the Swiss franc Black Swan event of January 2015, disrupting the market and forcing many brokers to the edge. Other mutations in the market are due to mergers, a prime example is the recent IronFX FXDD merger plan outlined in an assumed SEC's regulatory filing, which AtoZForex could not trace any direct indication.
Both IronFX and FXDD are relatively large retail Forex brokers in the industry, initially rival to each other. A merger between the two firms could possibly be valued approximately $150M – $225M. On top of this, the combined companies would also open doors to many jurisdictions. Considering that FXDD Global is regulated in Malta by the Malta Financial Services Authority (MFSA), while IronFX is based in Limassol, Cyprus and regulated by CySEC and has three other branches regulated by FCA UK, ASIC, and FSB.
Free PR or real motive?
Based on previous similar announcements, it is likely that today's announcement serves as an extra PR. Just like last year's rumor on IronFX Alpari UK take over.
One of the main reasons why we are convinced that there is no actual takeover nor merger is due to the fact that SEC Filing issued last week did not cover any kind of direct merger between FXDD and any other firm.
What if IronFX FXDD merger was real?
What would the underlying reason for a supposed IronFX FXDD merger be assuming that it was real? The inter-dealer brokerage arm of Compagnie Financière Tradition, Tradition is the controlling shareholder over FXDD. According to the initial commentary both companies would be merged and going for a reverse takeover of an existing company that is already publicly traded which would aim to be listed on NASDAQ at a later stage.
Relating back to the SEC regulatory filing, which was made last Friday on the 3rd of June, on behalf of a public company called Nukkleus Inc (OTCMKTS:NUKK). The company name Nukkleus Inc. might not ring a bell. However, the regulatory filing was signed by Nukkleus’ CEO Emil Assentato. He is the CEO of Tradition North America, which is the US arm of the Swiss based interdealer broker Compagnie Financiere Tradition SA (SWX:CFT).
Connect the dots and you will see that Tradition could possibly control Nukkleus, FXDD and IronFX. The regulatory filing outlines the initial phase of a multi-step process for the IronFX FXDD merger, which eventually makes way for the publicly-traded Nukkleus.
What would the next step be?
There is no single confirmation neither from the SEC nor IronFX nor the FXDD teams. In the meantime may the rumor be true, as the following step both brokers would be entering into a Global Services Agreement in order to manage the relationships between the firms until the merger is concluded. This period would last approximately 6 months or more. The length of this period would majorly depend on the regulatory approvals from every regulation in order to finalize the merger and only end of 2016 the actual merger would be concluded.
What is the reality?
Based on the information we have so far managed to gather, there is no strong merger indication yet. Indeed the story is based on "fishing", which means one firm "fishes" around with another one to see if the latter would be interested in any kind of merger. Hence, FXDD reached out to IronFX to check for possible collaboration while IronFX took the opportunity to check for the potential methods of working together.
Next, Tradition, the main shareholder of FXDD does not have a NASDAQ listed public company. Indeed the publicly listed company Tradition has is a pink sheet company. Lastly, neither of the mentioned firms are so far qualified for NASDAQ listing. But, none of these comments could eliminate the possible traditional takeover.
While we will look more into this subject, what do you think of the possible merger between IronFX and FXDD?