Leading independent securities firm KCG Holdings (NYSE: KCG), which offers agency and market-making execution services across multiple asset classes, today reported its financial metrics for Q3 2016, with diminishing revenues snapping a previously strong uptrend in the 2015 while holding a weak QoQ performance streak.
During Q3 2016, KCG unveiled a consolidated loss of $11.2 million – this represents a massive QoQ drop from a profit of $33.5 million in Q2 2016. Furthermore, KCG reported diluted earnings per share (EPS) of -$0.13 in the Q3, compared to $0.39 from a quarter earlier.
The lackluster volumes follow on the heels of KCG Holdings Q2 2016 figures, which saw diminishing revenues of $319,914 million, versus $344.52 million in Q1 2016.
The strength of the first quarter continues to evaporate in Q3 2016, as KCG’s revenues came in at just $208,532 million, vs. $377,036 million in Q3 2015, or -44.7% YoY. This figure was also notably weak when weighed against its second quarter equivalent, constituting a similar decline of -34.8% QoQ from Q2 2016.
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Market activity dies after a post-Brexit flurry
In terms of volumes, KCG saw an average daily dollar volume of $26,352 billion in Q3 2016, which represents a marginal increase of 1.2% QoQ from $26,046 in Q2 2016. Across a yearly timeframe, KCG’s latest volumes figures were even weaker, which fell by -16.3% YoY from $31.5 billion in Q3 2015.
KCG’s quantitative trading volumes also saw an average of just 3.28 million trades in Q3 2016, down -8.1% QoQ from 3.577 million trades in Q3 2015. Taking a yearly perspective, it was also down by a factor of -18.3 percent YoY from 4,025 million trades in Q3 2015. In particular, NYSE and NASDAQ shares traded also shrunk to 949,000 in Q3 2016, declining -2.4% QoQ from 972,000 in the period ending June 2016.
Finance Magnates reported earlier last week about KCG when the firm announced its September 2016 trading statistics showing a rise in key areas from August’s results.
Commenting on the results, Daniel Coleman, Chief Executive Officer of KCG, said: “Market activity quickly died down after a brief post-Brexit flurry to close the second quarter and remained subdued throughout July and August with cautious trading and realized volatility near all-time lows. Despite a modest pickup in September, the trading environment proved challenging for our quantitative trading models. Although KCG’s financial results for the quarter were disappointing, we nonetheless posted strong market share in core segments of the market. In addition, we completed the acquisition of Neonet, which expands KCG’s agency-based electronic trading in Europe ahead of anticipated opportunities from regulatory changes with the implementation of MiFID II.”
Mr. Coleman added: “The unusually low volatility and generally poor market conditions combined with renewed competition for retail order flow negatively impacted the contribution from U.S. equities for the quarter. KCG market making underperformed as reflected in the average revenue capture per U.S. equity dollar value traded for the quarter. Market making outside U.S. equities faced similarly difficult conditions. As we build scale in select asset classes and regions, and market conditions generally improve, we expect contributions outside U.S. equities to become more significant to the segment revenues.”