Monex Group Revenues Plunge in All Business Units Since April

Monex Group Inc., the Tokyo-based brokerage, today reported preliminary financial results for both the parent company and its wholly owned subsidiary Monex Inc., the dedicated FX and CFD business unit. Final results are expected to be published on October 30th, 2014.

The accounting period used by Monex is from April 1st, 2014 to September 30, 2014. Monex sees this period as the first half of its fiscal year, but is essentially Q2 and Q3 2014.

First, the Bad News

The parent company reported significant year-on-year declines in both Total Operating Revenue and Income.

Monex reported a total operating revenue figure of ¥22,800 million (~$211 million) compared to ¥29,284 (~$271 million) for the same period last year, representing a 22% year-on-year decline. Pre-tax income collapsed from ¥11,078 million in 2013 down to ¥300 million this year – a 97% fall. Net income was actually negative (-¥300 million) since April.

Monex Inc.

The sharp fall in the Group’s overall performance is also reflected in the results of Monex Inc. – the Japanese-based subsidiary offering retail FX trading services. The comparatively better performance of Monex Inc. compared to Monex Group means that Monex Inc. now accounts for approximately 65% of the company’s total revenue.

Trading volumes at Monex Inc. had a healthy bounce back in the month of September, although when contrasting Monex’s performance in 2014 with last year's, indicating a broad decline in trading volume, fees/commissions and consequently, revenue generated.

Total Operating Revenue at Monex Inc. fell from ¥20,729 million last year to ¥14,895 million in 2014 – a 22% decline. Net Operating Income plummeted by over 63% year-on-year from ¥8,904 million in 2013 to ¥3,263 million for the same period in 2014.

Since April 1^st 2014, total liabilities and net assets have grown from ¥531,551 to ¥574,176 with a large proportion of the rise attributed to a ¥36,816 (24%) rise in client deposits over the period.

Looking at the figures in more detail indicate that all metrics at Monex Inc. suffered over the past 6 months. Commission revenue was 36.5% lower while operating income is 63% lower. Stocks and ETF commissions have been hit hardest, falling 39% from ¥11,296 million to ¥6,933 million.

Now the Good News

On the flip side, Monex reports higher levels of client deposits, segregated capital and monies held in trust accounts. Client deposits rose from ¥53,193 million to ¥62,590 million and segregated capital rose from ¥192,897 million to ¥221,792 million.

On a broad basis these results underline two key points. One is that market Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or 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. Trad In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, or 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. Trad Read this Term continues to hold retail brokerages to ransom. If markets stay flat, clients refrain from trading and retail brokers’ revenues are the first to suffer. And two, that clients are happy to sit on the sidelines in the absence of market volatility with a view of raising exposure in volatile times – a retail market indeed.

In other news, Monex has promoted Nozomi Takasaki to the firm's Board of Directors Office – a specialised unit that reports directly to the Board of Directors on corporate governance issues and “reinforces business Execution Execution Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Execution is the process during which a client submits an order to the brokerage, which consequently executes it resulting in an open position in a given asset. The execution of the order occurs only when it is filled. There is typically a time delay between the placement of the order and the execution which is called latency.In the retail FX space, reliable brokers always strive to deliver best execution to their clients in order to maintain a solid business relationship with them. This is a co Read this Term oversight,” according to a Monex company announcement.