Dukascopy Revenues Flat Despite Uptick in Volatility in H1
- While the broad industry has been reporting a massive spike in revenues, Dukascopy posts a small loss.
Swiss brokerage Dukascopy has reported its results for the first half of 2018. The firm’s revenues totalled CHF 14 million ($14.5 million). The figure is flat when compared to last year as the company’s performance did not get a significant boost from a spike in Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. Read this Term.
Industry peers have been reporting a massive spike in revenues in H1. While some of this was caused by the collapse in the cryptocurrency market and brokers being able to B-book revenues on the other side of their customers' trades, others enjoyed a period of turbulence in the equity market in February.
Without a material increase in FX volatility on a sustained basis, the collapse in the global stock market did not affect the revenue flows of Dukascopy. Whether or not that is related to the trading preferences of the Swiss bank’s clients remains to be seen, as the firm has only published a preliminary report. The Swiss bank's CFO Laurent Beilliers commented to Finance Magnates: "The main driver of our income is market volatility. This parameter unfortunately can neither be predicted nor influenced."
A Small Loss
The operating costs for Dukascopy in the first half of the year totalled about CHF 14 million ($14.5 million). The figure represents a slight decrease when compared to last year’s CHF 14.9 million.
The bottom line for the Swiss bank in the first half of this year is a net loss of CHF 187,117 ($193,000) after taxes. The operating result is a loss of CHF 41,137. The loss booked by the company is significantly lower than the CHF 901,711 mark ($939,282) recorded last year.
Last year the firm posted a small net profit of CHF 117,000 ($120,000). Over the years, the net profit of the company has been declining amid an increasingly competitive landscape which caused an increase in costs across the industry. Dukascopy has been diversifying by increasing its presence in Japan and in Asia overall. The company’s reputation of a regulated Swiss bank makes the firm’s proposition in the Far East an attractive one for the local market conditions.
The company has been heavily investing in the development of its infrastructure in recent years. This year however the market is facing the reality of the new ESMA regulations. Whether or not this will have a material impact on the Swiss bank's business in the near term remains to be seen.
Swiss brokerage Dukascopy has reported its results for the first half of 2018. The firm’s revenues totalled CHF 14 million ($14.5 million). The figure is flat when compared to last year as the company’s performance did not get a significant boost from a spike in Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders can be successful in both low and high volatile environments, but the strategies employed are often different depending upon volatility. Why Too Much Volatility is a ProblemIn the FX space, lower volatile currency pairs offer less surprises, and are suited to position traders.High volatile pairs are attractive for many day traders, due to quick and strong movements, offering the potential for higher profits, although the risk associated with such volatile pairs are many. Overall, a look at previous volatility tells us how likely price will fluctuate in the future, although it has nothing to do with direction.All a trader can gather from this is the understanding that the probability of a volatile pair to increase or decrease an X amount in a Y period of time, is more than the probability of a non-volatile pair. Another important factor is, volatility can and does change over time, and there can be periods when even highly volatile instruments show signs of flatness, with price not really making headway in either direction. Too little volatility is just as problematic for markets as too much, we uncertainty in excess can create panic and problems of liquidity. This was evident during Black Swan events or other crisis that have historically roiled currency and equity markets. Read this Term.
Industry peers have been reporting a massive spike in revenues in H1. While some of this was caused by the collapse in the cryptocurrency market and brokers being able to B-book revenues on the other side of their customers' trades, others enjoyed a period of turbulence in the equity market in February.
Without a material increase in FX volatility on a sustained basis, the collapse in the global stock market did not affect the revenue flows of Dukascopy. Whether or not that is related to the trading preferences of the Swiss bank’s clients remains to be seen, as the firm has only published a preliminary report. The Swiss bank's CFO Laurent Beilliers commented to Finance Magnates: "The main driver of our income is market volatility. This parameter unfortunately can neither be predicted nor influenced."
A Small Loss
The operating costs for Dukascopy in the first half of the year totalled about CHF 14 million ($14.5 million). The figure represents a slight decrease when compared to last year’s CHF 14.9 million.
The bottom line for the Swiss bank in the first half of this year is a net loss of CHF 187,117 ($193,000) after taxes. The operating result is a loss of CHF 41,137. The loss booked by the company is significantly lower than the CHF 901,711 mark ($939,282) recorded last year.
Last year the firm posted a small net profit of CHF 117,000 ($120,000). Over the years, the net profit of the company has been declining amid an increasingly competitive landscape which caused an increase in costs across the industry. Dukascopy has been diversifying by increasing its presence in Japan and in Asia overall. The company’s reputation of a regulated Swiss bank makes the firm’s proposition in the Far East an attractive one for the local market conditions.
The company has been heavily investing in the development of its infrastructure in recent years. This year however the market is facing the reality of the new ESMA regulations. Whether or not this will have a material impact on the Swiss bank's business in the near term remains to be seen.