KCG’s Q4 Financials Buck Quarterly Uptrend as Revenues Weigh

KCG Holdings, Inc. (NYSE: KCG) has reported its financial metrics for Q4 2015, with diminishing revenues snapping a previously strong uptrend in H2, according to a KCG statement.

The lackluster volumes follow on the heels of KCG Holdings Q3 2015 figures, which saw strong revenues of $377.0 million, vs. just $261.9 million in Q2 2015, or a 42.8% QoQ.

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However, the strength of the past quarter evaporated in Q4 2015, as KCG’s GAAP revenues came in at just $262.7 million, vs. $377.0 million in Q3 2015, or -30.3% QoQ. This figure was also notably weak when weighed against its 2014 equivalent, constituting a similar decline of -24.1% YoY from $346.1 million in Q4 2014.

In terms of volumes, KCG saw an average daily dollar volume of $28.8 billion in Q4 2015, which represents a drop of -8.6% QoQ from $31.5 in Q3 2015. Across a yearly timeframe, KCG’s latest volumes figures were even weaker, which fell by -8.9% YoY from $31.6 billion in Q4 2014.

KCG’s Quantitative Trading Quantitative Trading Quantitative trading is defined as a type of market strategy that relies on mathematical and statistical models to both identify and execute opportunities. Also known as quant trading, this strategy uses models that are driven by quantitative analysis, as well as advanced research and measurement to strip complex patterns of behavior into numerical values.Of note, quantitative trading eschews qualitative analysis, which evaluates opportunities based on subjective factors such as management exper Quantitative trading is defined as a type of market strategy that relies on mathematical and statistical models to both identify and execute opportunities. Also known as quant trading, this strategy uses models that are driven by quantitative analysis, as well as advanced research and measurement to strip complex patterns of behavior into numerical values.Of note, quantitative trading eschews qualitative analysis, which evaluates opportunities based on subjective factors such as management exper Read this Term volumes also saw an average of 3.7 million trades in Q4 2015, down -7.5% QoQ from just 4.0 million trades in Q3 2015. In particular, NYSE and NASDAQ shares traded also shrunk to 922,000 in Q4 2015, declining -6.4% QoQ from 985,000 in Q3 2015.

According to Daniel Coleman, Chief Executive Officer (CEO) of KCG, in a recent statement on the Q4 metrics: “The decline in consolidated U.S. equity market volumes and Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term was exacerbated by continuing strong competition, tight spreads and the weakest quarterly gross retail dollar volume in a year and a half.”

“Retail investors pulled money from the U.S. equity market in December and we saw evidence of institutional-size portfolio liquidations late in the quarter. In fixed income market making, KCG Acknowledge FI set a new quarterly record for average daily U.S. Treasury notional volume with a 51 percent rise year over year despite a decline in market volumes," he added.

At the time of writing, KCG share prices are sitting deep in negative territory for the month, settling at $10.40 ahead of the US open. KCG's share prices are presently operating near its YTD low of $10.35 from earlier this month, though the company carries despite a low P/E of just 4.02.