Following their earnings report, FXCM held its conference call presentation. You can check out the entire transcript of the call here. Below are areas that were of focus in the prepared presentation and Q&A session.
Revenues per million: Although Q1 2013 retail volumes were record breaking for FXCM, revenues were below 2012 levels. This was due to a drop in ‘retail revenue per million’ from $94 to $88. The decline brought the figure below $90-$100 level, which FXCM has stated on multiple conference calls as where they expect revenues per million to fall. CEO Drew Niv attributed this decline due an increase in volumes originating from Japan which has lower revenues per million as well as a higher proportion of yen volumes “ which saw a decline in the pip conversion from prior years when the Yen was worth more money.”
OptionsXpress : FXCM announced that optionsXpress, a division of Charles Schwab, had become a white lable partner of theirs. In terms of White Labels, beyond the ones that were announced, such as with ETrade and Barlcays, Niv said that they had more in the pipeline. He added that the existing partnerships are beginning to contribute.
Institutional Business: As written yesterday, FXCM’s record quarterly revenues were driven by its institutional trading division. The unit was boosted by the acquisition of 50.1% of Lucid Markets. FXCM stated that Lucid achieved $361,000 in daily revenues during the first quarter which was 39% above Q4 2012 levels. During the Q&A, it was asked whether Lucid would be affected by potential changes at EBS or other firms to curb high frequency trading. Niv answered that it would be beneficial for Lucid as they aren’t the fastest ECN participants. He also pointed to Lucid’s 43% and 31% growth in trading at EBS and Thomson Reuters respectively, which shows they haven’t been hampered by changes that were enacted during 2012 at those venues.
Dealing Desk is a dud: The dealing desk account offering with lower spreads that was launched last year continues to be growing slowly. Niv stated that only around 1 of 10 new clients are choosing it.
Cash Flow : As in the past, FXCM has made an effort to highlight that investors should focus on cash flow. In that regard, FXCM posted $33 million in after tax cash flow during Q1, a 136% increase from Q1 2012. CFO Robert Lande commented on the cash flow importance “Our near term focus will be to reduce debt level somewhat but you can expect us to start ramping up returning capital to shareholders shortly through share repurchases and potentially dividend increases.”
Organic Growth/Caution: During the quarter FXCM experienced organic growth taking place in Japan and China. However, Niv on more than one occasion pointed out that despite an increase in Volatility; we are still around five year lows. As such, while the broker is positioning itself to be present in areas experiencing growth, they are still being cautious. Niv explained “we believe our best strategy to increase shareholder value is to increase the scale of the company and sizing geographic reach, while well diversifying our sources of revenue,” thus indicating they will continue to be searching for opportunistic M&A deals.
End of Principal Model: It’s not the first time it was mentioned, but Niv once again stated that he was skeptical that single dealer market making in retail FX would continue to be permitted by the major regulators. FXCM obviously has a vested interest in this, but their theory is that Dodd-Frank regulations are forcing more institutional trading to be conducted on multi-bank platforms. Therefore, it’s only a matter of time before this becomes a reality in retail FX. In the Q&A, Niv added that it was a “virtual certainty” that agency business will become mandatory among major regulatory jurisdictions. He also said that he imagined some firms with a principal model would make the switch, but others wouldn’t be able to survive; which fits in their theme that they see consolidation continuing.
Trading Breakdown: FXCM didn’t provide specifics, but Niv mentioned that EURUSD trading composed around 40% of volumes in 2012. In 2013, yen crosses, specifically GBPJPY, EURJPY, and the USDJPY account for between 50-60% of volumes, with the three pairs being the top three pairs traded during many days. Therefore, Niv explained that FXCM’s retail division was going through a shift in their trading activity which could continue to depress their overall revenue per millions number. Also, taking a look at these figures, it suggests that if FXCM were to strip out their Japan and China growth, overall trading may be stalling or in decline.
Following their earnings report, FXCM held its conference call presentation. You can check out the entire transcript of the call here. Below are areas that were of focus in the prepared presentation and Q&A session.
Revenues per million: Although Q1 2013 retail volumes were record breaking for FXCM, revenues were below 2012 levels. This was due to a drop in ‘retail revenue per million’ from $94 to $88. The decline brought the figure below $90-$100 level, which FXCM has stated on multiple conference calls as where they expect revenues per million to fall. CEO Drew Niv attributed this decline due an increase in volumes originating from Japan which has lower revenues per million as well as a higher proportion of yen volumes “ which saw a decline in the pip conversion from prior years when the Yen was worth more money.”
OptionsXpress : FXCM announced that optionsXpress, a division of Charles Schwab, had become a white lable partner of theirs. In terms of White Labels, beyond the ones that were announced, such as with ETrade and Barlcays, Niv said that they had more in the pipeline. He added that the existing partnerships are beginning to contribute.
Institutional Business: As written yesterday, FXCM’s record quarterly revenues were driven by its institutional trading division. The unit was boosted by the acquisition of 50.1% of Lucid Markets. FXCM stated that Lucid achieved $361,000 in daily revenues during the first quarter which was 39% above Q4 2012 levels. During the Q&A, it was asked whether Lucid would be affected by potential changes at EBS or other firms to curb high frequency trading. Niv answered that it would be beneficial for Lucid as they aren’t the fastest ECN participants. He also pointed to Lucid’s 43% and 31% growth in trading at EBS and Thomson Reuters respectively, which shows they haven’t been hampered by changes that were enacted during 2012 at those venues.
Dealing Desk is a dud: The dealing desk account offering with lower spreads that was launched last year continues to be growing slowly. Niv stated that only around 1 of 10 new clients are choosing it.
Cash Flow : As in the past, FXCM has made an effort to highlight that investors should focus on cash flow. In that regard, FXCM posted $33 million in after tax cash flow during Q1, a 136% increase from Q1 2012. CFO Robert Lande commented on the cash flow importance “Our near term focus will be to reduce debt level somewhat but you can expect us to start ramping up returning capital to shareholders shortly through share repurchases and potentially dividend increases.”
Organic Growth/Caution: During the quarter FXCM experienced organic growth taking place in Japan and China. However, Niv on more than one occasion pointed out that despite an increase in Volatility; we are still around five year lows. As such, while the broker is positioning itself to be present in areas experiencing growth, they are still being cautious. Niv explained “we believe our best strategy to increase shareholder value is to increase the scale of the company and sizing geographic reach, while well diversifying our sources of revenue,” thus indicating they will continue to be searching for opportunistic M&A deals.
End of Principal Model: It’s not the first time it was mentioned, but Niv once again stated that he was skeptical that single dealer market making in retail FX would continue to be permitted by the major regulators. FXCM obviously has a vested interest in this, but their theory is that Dodd-Frank regulations are forcing more institutional trading to be conducted on multi-bank platforms. Therefore, it’s only a matter of time before this becomes a reality in retail FX. In the Q&A, Niv added that it was a “virtual certainty” that agency business will become mandatory among major regulatory jurisdictions. He also said that he imagined some firms with a principal model would make the switch, but others wouldn’t be able to survive; which fits in their theme that they see consolidation continuing.
Trading Breakdown: FXCM didn’t provide specifics, but Niv mentioned that EURUSD trading composed around 40% of volumes in 2012. In 2013, yen crosses, specifically GBPJPY, EURJPY, and the USDJPY account for between 50-60% of volumes, with the three pairs being the top three pairs traded during many days. Therefore, Niv explained that FXCM’s retail division was going through a shift in their trading activity which could continue to depress their overall revenue per millions number. Also, taking a look at these figures, it suggests that if FXCM were to strip out their Japan and China growth, overall trading may be stalling or in decline.
58% of UK Investors Choose Professional Guidance over 'Finfluencers’
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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