FXCM Inc Accumulates Almost Half a Billion Losses for H1 2015

Retail and institutional foreign exchange operator FXCM Inc (NYSE:FXCM) has just posted its second quarter results. The company has registered

Retail and institutional foreign exchange operator FXCM Inc (NYSE:FXCM) has just posted its second quarter results. The company has registered a loss of $98.9 million for the period, which compares to a loss of $2.6 million for the same quarter last year. The figure is much lower than in the first quarter of 2015, when the company took a hit from the surprise decision of the Swiss National Bank to scrap the EUR/CHF exchange rate floor at 1.20.

Revenues came in at $59.2 million, which is lower by 20 percent when compared to a year ago. The net loss totaled to $2.03 per fully diluted share.

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Following the announcement, FXCM’s share price fell more than 10%, dipping below its 52-week low to reach 0.92.

Looking at the first half of 2015, FXCM Inc (NYSE:FXCM) lost almost half a billion U.S. dollars ($492 million to be precise). Revenues have decreased by 18 percent for the same period, with the revenues per million (RPM) measure plunging as low as $54, which is substantially lower than a year ago when despite the currency market going through its lowest period of volatility in two decades the figure stood at $96.

The figures were impacted by a loss on a derivative liability totaling $99 million, which the company has taken on its books related to the increase in value of the Leucadia bailout loan agreement.

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The brokerage had to find emergency financing to continue its operations in the aftermath of the SNB storm roiling through the currency markets. Yesterday Leucadia announced that it has written off $100 million of the FXCM loan’s value.

A very significant part of the decline is the sale of FXCM Japan to Rakuten Securities.

FXCM’s cash position remains solid with $273 million in operating cash, while customer equity increased 10 percent or $667 million at the end of the second quarter to $735 million as of the 30th of June 2015. According to the data provided by FXCM, $47 million of increase was due to the Citibank acquisition with the remaining $20 million representing organic growth.

These figures are out despite the company halving its advertising budget when compared to a year ago.

Looking at the company’s regulatory capital position, FXCM Inc looks solid with a surplus of $117 million.

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