Strategic Options for KCG Hotspot after Global Execution Services down 8% QoQ

KCG Holdings revealed in its quarterly report that it is looking to sell its Hotspot FX unit just as it

KCG LogoKCG Holdings Inc. (NYSE: KCG), the company behind one of the leading ECNs, KCG Hotspot, has just reported its third-quarter earnings. The global execution services part of its business, including the leading ECNs, KCG Hotspot, reported revenues dropped by 7.8% when compared to the second quarter of 2014.

The company shared in its quarterly earnings report that it is has begun to explore strategic options for KCG Hotspot, aiming to execute any opportunities that create additional value for stockholders, clients and employees if any opportunities arise. The firm’s earnings report further outlines, “KCG has not made a decision to enter into any transaction at this time, and there can be no assurance that KCG will enter into such a transaction in the future.”

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The company’s CEO, Daniel Coleman, has declined to provide any additional details about KCG Hotspot during the quarterly earnings call.

Average daily volumes at KCG’s ECN foreign exchange offering have risen, breaking multiple records through the quarter, after the notorious ECB press conference by ECB’s Mario Draghi, leading to the highest ever monthly volumes at KCG Hotspot. The company also reported a new daily record number in October as a short covering rally unfolded the biggest daily move in the EUR/USD pair since 2012.

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Total quarterly volumes at KCG Hotspot rose by almost 16% when compared to the second quarter of this year and a touch more than 6% when compared to last year’s third-quarter result. The unit realized a pre-tax loss of $1.7 million including a net debt charge of $1.6 million.

The Global Execution Services segment comprises of agency execution services and trading venues.


Overall, KCG Holdings, Inc. (NYSE: KCG) reported a GAAP net loss of $9.6 million, or $0.09 per share for the third-quarter of 2014. Pre-tax loss from continuing operations totaled $15.2 million, including a $15.1 million net gain related to the Company’s strategic investment in tradeMONSTER Group, Inc. (“tradeMONSTER”) and combined with OptionsHouse LLC (“OptionsHouse”), $10.5 million in compensation related to a recent substantial reduction in workforce and other employee separations and a $0.3 million lease loss accrual.

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