Forex Capital Markets Limited (FXCM), a foreign exchange (forex) and contracts-for-difference (CFD) broker, has published its 2018 financial results for its operations based in the United Kingdom, revealing a loss of more than £5 million.
Specifically, for the 12 months ended 31 December 2018, FXCM UK reported a total loss of £5,044,222. This represents a significant growth of loss of 867.3 percent when compared to the loss reported in the previous year, which was £521,484.
Turnover for the firm also dropped on a year-on-year comparison. In 2018, turnover came in at £58.8 million. This represents a decline of 24.6 percent from £78.0 million reported in 2017.
ESMA and Low Volatility Hurt FXCM
FXCM UK’s results are in line with a larger industry trend, as brokers throughout the European Union (EU) have been reporting lower profit and revenues since the European Securities and Markets Authority (ESMA) implemented its product intervention measures.
As highlighted by the report, the broker’s results were largely driven by a drop in trading volumes, which was evident across the entire FX and CFD trading industry. This, in turn, was influenced by lower currency volatility as well as ESMA’s measures.
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The retail trade volume for the 2018 financial year was $1.104 trillion. When measuring this against the previous year, which had a retail trade volume of $1.672 trillion, it is lower by 34 percent.
“The Company’s revenue and profitability rely on high levels of volatility, which in the FX markets is largely contingent upon the expectation of how much interest rates will change in the future,” the report said.
“Low volatility is consistently a threat and a very real possibility in the second half of 2019. Brexit, European elections and the US-China trade talks may temporarily give rise to higher volatility, but stagnant G7 interest rate expectations will dampen hopes for lasting volatility.”
Looking ahead, the company plans to retain and grow its client base throughout 2019. During the year, FXCM UK’s main objectives are to optimize revenues and strengthen the FXCM brand.
In order to optimize revenues, the broker aims to improve the conversion rates of new account applicants while at the same time decrease the time it takes between applying for a new account and placing a trade.
Finance Magnates reached out for a comment on the results; however, as of the time of publishing, we have not yet received a response.