KCG Holdings, the company behind one of the leading ECNs, KCG Hotspot, has announced its second quarter earnings. The global execution services part of its business, including KCG Hotspot, has reported revenues dropping by 1.5% when compared to the first quarter of 2014. Average daily volumes at KCG’s ECN foreign exchange offering have dropped by 18.6% when compared to the first quarter, averaging $26.2 billion daily.
Throughout the second quarter of 2014, the pre-tax income generated by the segment totaled $0.7 million, including a debt interest charge of $1.8 million and a workforce reduction compensation totaling $1.9 million. Should those items be excluded, the net pre-tax income would total $2.6 million in the second quarter which is lower than first quarter’s $4.6 million.
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Overall, the company has posted revenues dropping by 18% when compared to the numbers posted during the previous quarter, coming out at $314 million. Net income per share totaled $0.08, in GAAP pre-tax terms, totaling $14.5 million – lower by almost 75% when compared to the first quarter. The figure included included $3.1 million in compensation for workforce reduction, a $2.0 million write down of capitalized debt costs related to the principal repayment of debt, and a lease loss accrual of $1.9 million.
The announcement highlighted that the main reason for the decline in revenues is the drop in trading activity on the US equity market – lower by 13% in consolidated terms while the average volatility of the S&P 500 was merely 9.2 during the quarter.