ETX Capital is in exclusive negotiations to buy its collapsed spread-betting rival WorldSpreads. Talks have been ongoing over the weekend and a deal is likely to be announced within the next 24 hours.
Although the details are still being finalised, bankers say that ETX is likely to have a particular interest in WorldSpreads' client base and its technology platform. It is not clear whether any money will change hands – it will be a minimal amount if any.
The news came as WorldSpreads confirmed yesterday that KPMG had been appointed as special administrator. After an internal investigation, the company said on Friday that it was suddenly "unable" to assess its own finances following the discovery of "possible financial irregularities". Around 5,000 of its customers face losses of £13m after the spread-betting house yesterday admitted to a "shortfall of client money".
WorldSpreads believes it owes clients £29.7m but has cash balances of only £16.6m. Its shares were suspended on Friday – a move which came in the wake of the abrupt departure of its chief executive, Conor Foley, last week. The chief financial officer, Niall O'Kelly, has also gone, and it is at him that WorldSpreads seems to be pointing the finger, noting that the irregularities emerged within a day of his departure.
The chairman, Lindsay McNeile, denied on Friday that there were any problems at the company, brushing aside rumours that had been sweeping the City for at least a week. Mr McNeile said last week that Mr Foley had moved on because he had other "entrepreneurial" interests to pursue.
The scandal is bound to attract the further attention of the Financial Services Authority. The regulator says customers should contact the special administrator for more information.
There is considerable interest in the City at the identity of those on the WorldSpreads creditor list. They are likely to include some big names from within the spread-betting community, a tight-knit group where many clients have accounts with rivals firms. IG Group and London Capital Group – which owns Capital Spreads – both hurried out Stock Exchange statements yesterday saying they had no financial exposure to Worldspreads.
Neither ETX nor WorldSpreads would comment on any discussions.