ETX is set to mop up some of the mess at WorldSpreads

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The Independent Online

ETX Capital is poised to complete a deal that will rescue some of the wreckage from the collapse of spread-betting rival WorldSpreads.

The City firm considered buying the entire business at first but backed away after finding the losses at WorldSpreads too onerous to make a deal viable.

WorldSpreads collapsed in March after uncovering "financial irregularities" that left its customers facing losses of £13m.

ETX is now poised to take control of the Greek, Spanish and Danish arms of WorldSpreads, profitable concerns said to be free of the investigation that is focused on the London business.

It is expected to get Financial Services Authority backing soon and could confirm the plans this week. The deal will save a small number of jobs.

More than 60 per cent of WorldSpreads' revenues came from overseas. ETX itself has already expanded successfully into Germany and South Africa.

Those close to the process say ETX could have taken over WorldSpreads for a nominal £1 if it had agreed to make client positions good. It is likely that the FSA and administrators at KPMG would have backed such a deal. But the scope of the losses made this hard to justify, say those close to the process.

ETX also made an offer to buy the client base. However, World Spreads' own terms and conditions with its clients prevented the transfer of client details to another provider.

Its client list included some big names in the world of spread betting, including Simon Cawkwell, the self-styled Evil Knievil investor.

WorldSpreads says it owes clients £29.7m but had cash balances of only £16.6m. Clients can expect to recover the first £50,000 they had on account under the regulatory compensation scheme, but the rest will be lost.

The chief executive, Conor Foley, left just before the losses were unveiled, saying he had other "entrepreneurial" interests to pursue.