If you were wondering how bad last year was for Japanese brokers as volatility in the FX market collapsed, the annual report of Compagnie Financiere Tradition (CFT) sheds some light on the issue. The company has reported that its retail forex subsidiary Gaitame.com had a difficult year in 2017.
The report shows revenues in the first quarter of the year declining by 23.1 percent in constant currencies to USD 29 million (CHF 27.5 million). Underlying operating profits collapsed to USD 7.8 million (CHF 7.4 million), a figure that is about 40 percent lower year-on-year.
The underlying operating margin of the Japanese retail FX subsidiary of CFT dropped to 27% from 34.3%.
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Volatility Collapse Cuts into Revenues
During 2017, the main issue for the industry was a broadly observed collapse in volatility. According to data from Japanese brokers, however, the decline in trading activity related to the Japanese yen (Mrs. Watanabe’s favorite asset to trade), was even broader.
Trading volumes in the first two months of the year have completely reversed. The activity across JPY crosses is back in play and retail forex traders are back to trading full swing.
Institutional Unit Steady
The decline in the retail forex business of CFT is offset by the performance of the institutional unit of the company. The interdealer broking business of CFT contributed to a flat year for total revenues for the firm. Netting USD 844 million (CHF 802.5 million), the figure was flat when compared to last year.
The interdealer broker’s adjusted revenue was up 2.9 percent to a total of USD 890 million (CHF 846 million). Margins in the institutional business of CFT have also compressed, falling by 0.6 percent to to 9.3 percent.