KCG Hotspot Volumes Remain Upbeat in October with Potential Sale Rumoured

Photo: George Tchetvertakov

KCG Hotspot, a prominent FX trading venue, is on course to publish lukewarm FX trading volumes for October, if one inferences from statistics already available.

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In a recent flurry of activity, KCG is believed to be searching for a buyer for its currency trading unit, Hotspot, working with Jefferies Group LLC on the sale. Also, KCG has published its quarterly report announcing a quarter-on-quarter 7.8% fall in revenues.

Commercials and Financials Aside

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According to KCG’s trading figures, the venue has transacted $735.6 billion in total FX trading volume in October with 1 more trading day still to go. The final monthly total is likely to reach close to $770 billion.

When comparing presently available figures to last month’s figures, KCG is likely to record a ~9% month-on-month fall in traded volumes. Average Daily Volume (ADV) are likely to decline by approximately 13% from September, if assuming an October ADV of $33 billion compared to $38 billion in September. However, when compared to October 2013, KCG will probably book at least a 12% increase in total volume and a 13% rise in ADV.

KCG Hotspot Volumes — October Figure Is a Preliminary Estimate from Available Data

September’s trading volumes were particularly high across the trading arena at most brokerages and trading venues. The prime reason relates to unexpected macro-economic and geopolitical developments in the Euro-zone, Middle-East, Russian, the CIS regions. The combined effects of changes in interest rate expectations, commodity price fundamentals and other factors have encouraged traders to venture back into the speculative arena, buoyed by higher volatility.

A bumper September has to a large extent continued into October with several macro themes, including US Fed policy normalisation, EU bank stress tests and the Russia-Ukraine conflict continuing to exert pressure on selected currencies and commodity prices. Just yesterday, the Fed halted its long run asset purchases program and sounded unexpectedly hawkish in their assessment – thus helping to raise market volatility and speculative trading flows.