Launched in 2012 by Japanese broker Hirose, Hirose Financial UK was opened to expand the broker’s brand to a global audience as it embarked on a larger strategy of expanding beyond its home country. Hirose Japan itself is a top-ten broker in the country with around $100B in monthly trading turnover. Recently filed, Hirose UK’s annual shows that although the London firm has been able to achieve strong year-over-year account opening and volume growth, it still has a way to go to catch up to the parent firm.
For the year ending March 31st, 2014, the Hirose UK annual report showed revenue of £214,708 versus £8,802 in the same period last year. However, expenses of £984,396 drove down the company’s net results substantially to the red as they showed a £768,827 loss for the year. During the year, account openings grew 69.5% to 8,604, with Hirose UK attributing the increase as a result of adding MetaTrader 4 as a secondary trading offering to go along with its existing Lion Trader platform, which is a white label of ActForex. The addition of MetaTrader decreased Hirose’s platform related “software maintenance” expenses, which fell to £82,293 from £193,680 in the previous period. Interest for MetaTrader 4 versus Lion Trader is expected to increase as Hirose stated in its annual report that it is receiving “significant demand” for its new Lion Binary Options trading platform which was launched in March of this year, and offers uniform username and password login for both products.
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In terms of trading volumes, Hirose UK reported its figures in lots, which we estimated to have calculated to a total of $17.4B for the accounting year, or $1.45B in monthly trading. Based on these estimates, the firm’s £214,708 in revenues relate very tight margins extracted from each trade which are well below industry averages. However, as the annual report stated, that despite the losses the unit “continues to have strong financial support from its parent company,” which may indicate that a portion of Hirose UK’s revenue is being realized on the books of Hirose Japan. Such arrangements are typical of foreign offices, which share in liquidity arrangements with their parent firms.
Looking ahead, in addition to the binary options offering which is seeing demand, the annual report included a few tidbits of future guidance. In relation to third party affiliates, Hirose stated in the filing that it is in negotiations with possible Introducing Brokers and White Labels, to grow their partner’s business. They also stated that they expect to launch the LION FX platform, which is available in Japan, during 2015.