FXCM First Quarter Nets $393 Mln Loss after SNB Debacle

The broker currently has $200 million regulatory surplus with net loss for the quarter totaling $393 million as revenues shrink

The broker that suffered greatly after the Swiss National Bank induced debacle on the foreign exchange markets has just announced its first quarter results. FXCM Inc announced that its revenues shrank almost 16% year-on-year to $69.2 million.

The net operational loss totaled $393.3 million or $8.35 per fully diluted share. Last year, the foreign exchange broker reported a loss of $0.8 million or $0.02 per fully diluted share. The special factors affecting FXCM’s earnings last quarter included the massive hit that the broker took as its customers incurred negative equity balances in the aftermath of the SNB decision to scrap the EUR/CHF floor.

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After the unforeseen circumstances, the company was forced to seek emergency financing in order to meet its regulator capital requirements.

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All in all, special factors included $256.9 million bad debt expense from negative customer balances, net of recoveries, a loss on derivative liability of $292.4 million, a non-cash item relating to the increase in value of the Leucadia loan agreement, derivative expense under the loan agreement valued at its estimated fair value on each reporting date and goodwill impairment losses of $9.5 million from the firm’s institutional business.

In addition, other income of $145.2 million was attributed due to the reduction of FXCM Inc.’s estimated tax receivable agreement liability, offset by a corresponding provision for income tax of $177.9 million.

FXCM’s share prices lost 9.3% to trade at $1.95 in after-hours trading on the New York Stock Exchange.

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