Kpmg Alpari Uk

Alpari (UK) Limited (in special administration)

Meeting of creditors and clients

12 March 2015

1 2015 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

Agenda

Chairmans introduction

Key actions since appointment

Key continuing workstreams

Summary proposals

Creditors committee

Nominations currently received for committee

Q&A in relation to proposals and conduct

Voting


Disclaimer

This presentation has been prepared by Richard Heis, Samantha Rae Bewick and Mark Granville Firmin, the Joint Special Administrators of Alpari (UK) Limited (in special administration) (the Company) solely to comply with their statutory duty under Rule 59 of the Investment Bank Special Administration (England and Wales) Rules 2011 setting out the objectives of the special administration and for no other purpose. This presentation is not suitable to be relied upon by any person, or for any other purpose, or in any other contextThis presentation has not been prepared in contemplation of it being used, and is not suitable to be used, to inform any investment decision in relation to the debt of or any financial interest in Alpari (UK) Limited (in special administration)Any estimated outcomes for creditors included in this presentation are illustrative only and cannot be relied upon as guidance as to the actual outcomes for clients, creditors or other stakeholders. Any person that chooses to rely on this statement of proposals for any purpose, or in any context, other than under Rule 59 of the Investment Bank Special Administration (England and Wales) Rules 2011 does so at their own risk To the fullest extent permitted by law, the Joint Special Administrators do not assume any responsibility and will not accept any liability in respect of this statement of proposalsRichard Heis, Samantha Rae Bewick and Mark Granville Firmin are authorised to act as insolvency practitioners by the Institute of Chartered Accountants in England and Wales. The Joint Special Administrators act as agents for the Company and contract without personal liability. The appointments of the Joint Special Administrators are personal to them and, to the fullest extent permitted by law, KPMG LLP does not assume any responsibility and will not accept any liability to any person in respect of the presentation or the conduct of the special administration of the Company



Richard Heis Joint Special Administrator; chairman of meeting

Samantha Bewick Joint Special Administrator

Lynn Dunne Insolvency lawyer, Ashurst LLP

Drew Sainsbury Insolvency lawyer, Ashurst LLP

Objectives of the SAR

The Special Administration Regime has three objectives, having equal priority

The return of client assets

Timely engagement with market infrastructure bodies and the authorities

To wind the Company up in the best interests of the creditors

Purpose of the meeting

Discuss the Special Administrators Proposals

Consider the establishment of a creditors committee


Agenda




Summary proposals

Creditors committee



Voting



Sought sale of Company and/or its business and assets

Realised client and house estate funds

Working to confirm final account balances and ensure KYC in order

Developed Claims Portal

Determined currency of Client Money Pool

Communication process including website and helpline

Liaised with the FCA and FSCS

Created work streams and teams comprising Alpari and KPMG personnel and, where required, legal input

Other employees have undergone a redundancy programme following consultation with employee representatives

Management of overseas affiliates

Secured Company data


Agenda




Summary proposals

Creditors committee



Voting



Client demographic

Valuation of trades on 15 and 16 January 2015

Claims agreement including coordination with FSCS

Employees

Debtors

Other asset realisations

Client and creditor communication

Liaising with FCA and other regulatory requests and enquiries


Client demographic

Source: Alpari (UK) Limited Company records and KPMG analysisNote: Data may change following valuation of trades and further investigation of Company records.

CHF trade means any Client with one or more CHF trade at any stage on 15 / 16 January 2015* According to Company records

48%

44%

1% 7%

Client claims by volume

Cash balance (49,433) Zero balance (45,524)

CHF trade (1,241) Non CHF trade (6,676)

24%

0%

18%

58%

Client claims by value*

Cash balance ($ 23.0m) Zero balance ($0.0m)

CHF trade ($17.0m) Non CHF trade ($56.4m)


Client demographic

88%

8%4%0% 0%

0%

Client claims by volume

$0 - $99 (91,242) $100 - $999 (8,090)$1,000 - $9,999 (4,215) $10,000 - $19,999 (422)$20,000 - $49,999 (276) > $50,000 (126)

1%

5%

21%

9%

13%

51%

Client claims by value*

$0 - $99 ($0.7m) $100 - $999 ($4.5m)$1,000 - $9,999 ($20.5m) $10,000 - $19,999 ($8.9m)$20,000 - $49,999 ($12.2m) > $50,000 ($49.6m)

Source: Alpari (UK) Limited Company records and KPMG analysisNote: Data may change following valuation of trades and further investigation of Company records.* According to Company records



Client demographic



Employees

Debtors




The contractual position between the company and clients is governed by the Client Agreement.

Valuation of trades - overview

Due to the market conditions following the SNB announcement, many clients hit margin limits.

Board took the decision to close out all remaining open positions on 16 January.

Examine all fact patterns to ascertain whether the prices received in any of the close out transactions need to be amended for the above, or any other, reasons.

Majority of clients had positions closed out due to lack of margin (15-16 January) or

decision to close the book (16 January)

Determine whether all transactions were

executed in accordance with

contractual rights and applicable regulations

Clients will receive notification when they are able to agree their claims in the Claims Portal.

Account statements and client balances

issued

Make any necessary change to prices


Clients with open trades 15 / 16 January 2015

Market - prices received by clients per Company records on 15 / 16 January 2015.

Under review - further analysis is required with respect to the treatment of CHF positions closed out on 15 January

Clients with no CHF trades are expected to be given access to the Claims Portal to agree their claims by 20 March 2015 subject to any other individual client issues

CHF Non - CHF

Thursday 15 January 2015 Under review Market

Friday 16 January 2015 Market Market



Client demographic



Employees

Debtors




Clients with client money protection

Overview of category of claim

Clients Creditors

Clients without client money protectionUnsecured / trade creditors / employees

Shortfall to Clients (if any)


Clients

Where do I rank?

The assets realised fall into two categories: client money and non-client assets. The funds realised, after costs, will be distributed to clients and creditors, as set out below

Client money realisations Non-client asset realisations

Preferential creditors (will be paid in full)

Creditors and Clients regarding client money shortfall (if any)

To the extent that the Client Money Pool is insufficient to repay Clients in full, any unpaid amount will rank equally with the unsecured creditors against the non-client asset realisations


Value: USD 96.4 millionNumber: c. 110,000 Clients

Client claim agreement

Clients with a claim in the Client Money Pool

Claims Portal

Developed to agree Client claims

Cost effective and efficient method to agree high number of Client balances

Released to majority of Clients by 3 March 2015

Envisaged available to the majority of remaining Clients by end of March

Claims Portal is live for c. 83,840 Clients (c. USD 48.0 million)

To date 4,553 Clients have logged onto the Claims Portal

As at 10am on 11 March 2015, 2,812 Clients have agreed their claims (USD 13.4 million)


View account balance(s)

Agreed all account balances

Dispute one or more balance

Send explanation and evidenceZero balance Positive balance

No claim

Claims Portal What does it do?

Assign claim to the FSCS

Claim in special administration

No claim

Waive all claims

Await contact

Payment by the FSCS

Distribution from special

administration


Claims Portal agreement update

Source: Alpari (UK) Limited and KPMG analysisNote: Data as at 10am 11 March 2015

Source: Alpari (UK) Limited and KPMG analysisNote: Data as at 10am 11 March 2015

2203

60959 318

0

500

1000

1500

2000

2500

Num

ber o

f Clie

nts

Volume of Clients who have completed the Claims Portal

Agreed and intend to assign to the FSCS

Agreed and no intention to assign to the FSCS

Disputed claims

Waived claims

55%

44%

0% 1%

Value of Clients who have completed the Claims Portal

Agreed and intend to assign to the FSCS ($7.5m)

Agreed and no intention to assign to the FSCS ($5.9m)

Disputed claims ($0.04m)

Waived claims ($0.1m)


Prime brokersVolume: 2Value: 7.4

million

Client money shortfall (if

any)

Unsecured / trade

creditors / employees

Volume: 380Value: 4.8

million

Introducing brokers

Volume: 3,189Value: 1.1

million

Professional clients

Volume: 66Value: 12.2

million

Creditor claim agreement

Creditors

No action requiredStatement of Claim


Liaison with FSCS

The FSCS has confirmed that all products offered by Alpari (UK) Limited are eligible for compensation.

The FSCS will assess eligibility of individual Clients to make claims on a case by case basis.

The Claims Portal allows Clients to indicate whether they intend to assign their claim to the FSCS.

All Clients who agree their claims and confirm their intention to assign their claim to the FSCS will be contacted directly by the FSCS.

Clients who chose not to assign their claims in the Claims Portal are not precluded from later claiming from the FSCS.

As of Friday 6 March, 1,225 agreed balances had been passed to the FSCS.

Agreed balances will be passed to the FSCS on a weekly basis.

Once a claim has been assigned, the FSCS will receive any dividends in respect of that claim.


Claiming from the FSCS

If you choose to accept FSCS compensation, all of your rights to claim in the administration are legally transferred to the FSCS.

The FSCS will take assignment of the claim in the special administration for the whole of the Clients loss (even over 50,000).

When the FSCS receives dividends, it will pay the Client any amounts that they would otherwise have received if the Client had accepted dividends before claiming from the FSCS.

The FSCS will not make a profit on any assigned claim.

The FSCS rules require that a Client is no worse off whether you claim from the FSCS first or whether from the Joint Special Administrators first.

Representatives from FSCS are present at the meeting and available to answer any general questions after the meeting


Examples of FSCS payout

Example 1:

Client account balance = 80,000

FSCS initial compensation = 50,000

Initial dividend announcement of 50p/ results in a payment from the Joint Special Administrators to the FSCS of 40,000

FSCS pays further compensation of 30,000 to claimant so he is fully compensated (total 80,000), and retains 10,000 recovery for itself

TOTAL RETURN TO CLIENT = 80,000

Please note that this is an illustrative example, as we are not in a position to estimate the dividend amount at present.



Example 2:




FSCS pays further compensation of 50,000 to claimant (total 100,000), and retains nothing for itself





Example 3:




FSCS pays further compensation of 75,000 to claimant (total 125,000), and retains nothing for itself

Second dividend announcement of 10p/ results in a payment from the Joint Special Administrators to the FSCS of 15,000 to claimant (total 140,000), and retains nothing for itself


If there are further dividends they will be paid from the FSCS to the Client until such time (if any) that the Clients full claim of 150,000 is paid

If no further dividends are paid, the Client will suffer a loss of 10,000




Client demographic



Employees

Debtors




Employees

On appointment there were 166 employees

Employee representatives were appointed and consultation took place

All employees were retained and paid until 31 January 2015

On 30 January 2015, 104 employees were made redundant and 10 employees resigned

Those employees that were retained were split into specific workstreams including Claims Portal development, valuation of trades and assisting the Joint Special Administrators with their duties

At present 31 employees continue to be employed



Client demographic



Employees

Debtors




Debtors and other asset realisations

Debtors

Once final statements are issued, those that owe money to the Company will be contacted for payment and settlement details

Overseas affiliates

We have sought a sale for the Japanese subsidiary but as yet no offers have been made

Sale of business

As previously reported the Companys trademarks, domain names and licences were sold in February 2015 for USD 6.0 million

We are progressing negotiations with a preferred bidder based on a transfer of part of the Companys business


Other activities

IT and systems

The Company was heavily reliant on a substantial IT infrastructure which has had to be secured and adapted to ensure it could support the reporting and processing requirements of the special administration.

Property and other assets

The lease for the offices is paid up until 24 March 2015. Owing to the cost of remaining in the current offices, the Company and its remaining employees are moving to a Regus office at substantially lower cost.

Tax

The Company remains liable for corporation tax while in special administration.


Agenda




Summary proposals

Creditors committee



Voting


Summary proposals

Proposals were provided on arrival

Please indicate if you require a copy


Agenda




Summary proposals

Creditors committee



Voting


Creditors committee

Clients and creditors may establish a creditors committee

Between three and five persons may be elected

The balance of the committee between clients and creditors is set to ensure that it reflects all interested parties

Composition is

Up to three clients (which can include the FSCS)

Up to two unsecured creditors

If more persons than indicated wish to serve in each category, members will be determined by vote

If fewer than three persons step forward there will be no committee

All members will be required to sign a confidentiality agreement


Agenda




Summary proposals

Creditors committee



Voting



Clients

FSCS

Astrocyte Capital Limited (represented by Mr Piero Carbone)

Creditor

Astrocyte Capital Limited (represented by Mr Piero Carbone)

Go Markets Pty (represented by Mr Robert Berkeley)

If there is anyone else that would like to nominate themselves for the committee please see Helen Mansfield and Helen Seaman at the front of the stage


Agenda




Summary proposals

Creditors committee



Voting



Please state your name and who you are representing


Break

15 minutes


Agenda




Summary proposals

Creditors committee



Voting


Voting

Votes are calculated on the amount of a client or creditors debt

There are two classes

Clients who have claims into the Client Money Pool

Creditors

Each class votes separately

Each resolution is only approved if both classes approve it

Wholly secured creditors may attend but not vote (none identified to date)

Partly secured creditors must deduct the value of their security and may vote for the unsecured balance

Client votes admitted based on Company records (Chairs decision)

A resolution is passed if a majority in value, of those present and voting (in person or by proxy) vote in favour; unless

A resolution is invalid if more than half of the clients/creditors by value, who are not connected to the Company, vote against


Resolutions for clients and creditors

VOTING FORM 1

Resolution 1: To approve the Special Administrators proposals

Resolution 2: That a Creditors Committee be formed

Resolution 3: For the appointment of [insert nominated name] of [insert company name, if applicable] representing [your name] as a member of the Creditors Committee

Thank you

Presentation by Richard Heis

2015 KPMG LLP, a UK limited liability partnership, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.

The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

Alpari (UK) Limited (in special administration)AgendaDisclaimerChairmans introduction AgendaKey actions since appointmentAgendaKey continuing workstreamsClient demographicClient demographicKey continuing workstreamsValuation of trades - overviewClients with open trades 15 / 16 January 2015Key continuing workstreamsOverview of category of claim Where do I rank?Client claim agreementClaims Portal What does it do?Claims Portal agreement updateCreditor claim agreementLiaison with FSCSClaiming from the FSCSExamples of FSCS payoutExamples of FSCS payoutExamples of FSCS payoutKey continuing workstreamsEmployeesKey continuing workstreamsDebtors and other asset realisationsOther activitiesAgendaSummary proposals AgendaCreditors committeeAgendaNominations currently received for committeeAgendaQ&A in relation to proposals and conductBreakAgendaVotingResolutions for clients and creditorsThank youSlide Number 44

Kpmg Alpari Uk

Documents

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special administration

kpmg international cooperative

personal liability

swiss entity

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