FXCM Second Quarter Results Show Revenues down 30% YoY
- Listed FX and CFD brokerage firm, FXCM, has seen a sharp decline in trading revenues in the second quarter of 2014. Revenues were 30% lower YoY , however the firm saw client assets increase 10% year to date.
Leading multi-asset broker dealer, FXCM, has reported its second quarter earnings for 2014. The listed firm saw a number of significant events impacting its business. Overall, the financial services firm saw revenues drop considerably, both on a quarterly and annual basis. For the quarter ended June 30, the firm's (U.S. GAAP) revenues were $97.9 million, 30% lower YoY where the firm saw revenues reach $140.1 million.
The firm also reported that its adjusted Pro Forma EBITDA for the second quarter 2014 was $13.4 million, this was compared to $54.5 million for the second quarter 2013, a decrease of 75%. With similar metrics seen with the adjusted Pro Forma EBITDA for the six months ended June 30, which was $38.0 million, as compared to $98.3 million, a 61% decrease YoY.
The troublesome trading environment continues to impact trader behaviour as participants stay on the sidelines, triggered by the record low 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. Speaking about the firm’s results, Chief Executive Officer of FXCM, Drew Niv stated: “In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years.”
The broker has also seen a negative spillover in its institutional market-making unit, Lucid markets. The firm saw disappointing results since the acquisition twenty-five months ago. Lucid's revenues and EBITDA were at $11.8m and $6.8m respectively, the firm stating that Lucid and V3 have both been affected by the tough operating conditions with low market volatility.
On the upside, FXCM is rolling out new instruments as it further diversifies its product offering. The US-based broker has gradually been rolling out its new CFD trading portal, according to sources close to the matter, the platform was co-developed by FXCM and Digital Look.
The multi-asset broker has seen a gradual increase in its CFD business, in the latest findings CFDs represented 26% of the firm’s volumes, a 5% increase from figures reported a quarter earlier. The firm also plans to roll out its equity derivatives offering with single stock CFD instruments.
Drew Niv, CEO FXCM
The firm also saw growth in client deposits, total assets were $1.31 billion, up 10% year to date and a 5% increase from figures reported in March 2014.
“Despite the difficult trading conditions, we continue to gain market share and had another strong quarter of growth in customer equity, in part reflecting our strong brand and competitive position. Since year-end 2013, we have grown customer equity by $121 million or 10% and believe we are well positioned for when market conditions improve,” Mr. Niv added
FXCM has made a number of acquisitions as it enhances its portfolio as a global broking giant, the firm stated that it is exploring multiple M&A opportunities as part of its growth strategy, and it “remains committed to a disciplined acquisition approach.”
However, as several participants in the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term markets are experiencing some of the toughest trading conditions since the collapse of Lehman Brothers in 2008, FXCM also stated: “If environment persists & M&A does not materialize then meaningful cost reductions will be initiated.”
UK-based multi-asset broker, IG, released its annual earnings last month, although the firm published positive results for FY 2014, growth was in the single digits. The firm reported a 2.4% increase in its net trading revenue which was at $621 million.
Leading multi-asset broker dealer, FXCM, has reported its second quarter earnings for 2014. The listed firm saw a number of significant events impacting its business. Overall, the financial services firm saw revenues drop considerably, both on a quarterly and annual basis. For the quarter ended June 30, the firm's (U.S. GAAP) revenues were $97.9 million, 30% lower YoY where the firm saw revenues reach $140.1 million.
The firm also reported that its adjusted Pro Forma EBITDA for the second quarter 2014 was $13.4 million, this was compared to $54.5 million for the second quarter 2013, a decrease of 75%. With similar metrics seen with the adjusted Pro Forma EBITDA for the six months ended June 30, which was $38.0 million, as compared to $98.3 million, a 61% decrease YoY.
The troublesome trading environment continues to impact trader behaviour as participants stay on the sidelines, triggered by the record low 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. Speaking about the firm’s results, Chief Executive Officer of FXCM, Drew Niv stated: “In the second quarter of 2014, volatility in the currency markets hit all-time lows with FXCM seeing retail customer volumes the lowest they have been in years.”
The broker has also seen a negative spillover in its institutional market-making unit, Lucid markets. The firm saw disappointing results since the acquisition twenty-five months ago. Lucid's revenues and EBITDA were at $11.8m and $6.8m respectively, the firm stating that Lucid and V3 have both been affected by the tough operating conditions with low market volatility.
On the upside, FXCM is rolling out new instruments as it further diversifies its product offering. The US-based broker has gradually been rolling out its new CFD trading portal, according to sources close to the matter, the platform was co-developed by FXCM and Digital Look.
The multi-asset broker has seen a gradual increase in its CFD business, in the latest findings CFDs represented 26% of the firm’s volumes, a 5% increase from figures reported a quarter earlier. The firm also plans to roll out its equity derivatives offering with single stock CFD instruments.
Drew Niv, CEO FXCM
The firm also saw growth in client deposits, total assets were $1.31 billion, up 10% year to date and a 5% increase from figures reported in March 2014.
“Despite the difficult trading conditions, we continue to gain market share and had another strong quarter of growth in customer equity, in part reflecting our strong brand and competitive position. Since year-end 2013, we have grown customer equity by $121 million or 10% and believe we are well positioned for when market conditions improve,” Mr. Niv added
FXCM has made a number of acquisitions as it enhances its portfolio as a global broking giant, the firm stated that it is exploring multiple M&A opportunities as part of its growth strategy, and it “remains committed to a disciplined acquisition approach.”
However, as several participants in the foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term markets are experiencing some of the toughest trading conditions since the collapse of Lehman Brothers in 2008, FXCM also stated: “If environment persists & M&A does not materialize then meaningful cost reductions will be initiated.”
UK-based multi-asset broker, IG, released its annual earnings last month, although the firm published positive results for FY 2014, growth was in the single digits. The firm reported a 2.4% increase in its net trading revenue which was at $621 million.