GAIN Capital Reports Falling Retail Revenue Capture for Q1 2015 Period

GAIN Capital saw its Net Income fall to $8.3 in Q1 2015 compared to $17.6 million due to declining revenue

Gain capital has issued it is Q1 2015 financial report. The report follows a busy time for the broker having completed its purchase of City Index as well as maneuvering through the January 15th Swiss National Bank induced Swiss franc volatility which shook the industry. During the quarter, GAIN reported Net Income of $8.3 million or diluted earnings per share of $0.18 on revenues of $92.9 million. Although above the same period in 2014, the figures were below GAIN Capital’s record Q4 2014 period when they reported Net Income of $17.6 million on revenues of $114.7 million.

Highlights of the quarter include the firm reporting record retail trading volumes which totaled $798.6 billion. During the period, the broker’s GTX institutional business reported volumes of $1.23 trillion, which was slightly above Q4 2014’s activity. Also, futures trading within their Open E Cry unit continued to experience the growth which it achieved in 2014, with year over year contract volumes rising 51% to 1.6 million.

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Retail revenues per million (RPM) dollars traded declined to $83 from $115 in Q4 2014. As a result, despite the record retail trading volumes, revenues from retail trading fell 22.3% to $66.1 million versus $85.1 million in Q4 2014. In thee firm’s prepared remarks, GAIN Capital Stevens attributed the decline in revenue capture due to customers focusing on the EURUSD as he stated “We had record retail trading volume in the quarter, although much of the customer trading activity was focused on one-way trading in euro/dollar, which muted our revenue capture for the quarter.” (More details on this topic are expected to be revealed in the broker’s upcoming conference call which will be covered in a future post on Finance Magnates).

In the prepared remarks, Stevens noted that the firm’s closing of its purchase of City Index puts them on an annual run-rate of achieving $3 trillion in annual retail trading volumes. In addition, they expect volumes to become more diversified with an increase of CFD products trades due to City Index’s customer base. Also, Stevens reaffirmed the firm’s expected target of $45-55 million in expense synergies from acquiring City Index.

Stevens also noted that the Swiss franc volatility, of which they reported experiencing a profitable day on January 15th as opposed to rivals, left them in a stronger position, as he stated “We distinguished ourselves yet again through our risk management expertise during the SNB event onJanuary 15, strengthening our competitive position while allowing us to deliver positive financial results for the quarter.”

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