KCG Holdings’ Q4 2014 Operating Metrics Sizzle, ADV Swells 28% QoQ

KCG Holdings has released its Q4 2014 operating metrics, which were highlighted by strong gains across average daily volumes and

kcgKCG Holdings has released its Q4 2014 operating metrics, which were highlighted by strong gains across average daily volumes and operating revenues.

Earlier this week, KCG Holdings sold its KCG Hotspot unit to BATS Global Markets for $365 million, allowing BATS to foray into electronic FX trading in a bid to diversify its business.

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The news follows on an earlier report at the start of the new year in which Hotspot, KCG’s FX ECN, had a third consecutive month of trading volume declines in December 2014.

KCG reported its consolidated earnings for Q4 2014, coming in at $26.1 million, or $0.23 per diluted share. Furthermore, these results in Q4 2014 include a net tax benefit of $7.0 million. At this time, there are no additional details on the aforementioned sale.

In terms of revenues, KCG yielded $346,139,000 in Q4 2014, up 27.1% QoQ from $272,302,000 in Q3 2014. In particular, trading revenues were reported at $221,415,000 in Q4 2014, rising 46.8% QoQ from $150,865,000 during Q3 2013.

Volumes Notch Strong Gains in Q4

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Volumes also experienced a sharp increase in Q4, relative to their Q3 counterparts. Average daily dollar volume traded (in millions of $) came in at $31,621 in Q4 2014, growing 27.9% QoQ from $24,726 in Q3 2014.

According to Daniel Coleman, Chief Executive Officer of KCG, in a recent statement on the metrics, “During the fourth quarter, KCG generated solid financial results due in part to an improved operating environment. The U.S. equity market posted higher average daily share volume, dollar volume and realized volatility on both a sequential and annual basis.

Amid the heightened activity, KCG recorded market share gains in U.S. equity market making as well as algorithmic trading and order routing from the third quarter. Also contributing to KCG’s results were increased market volumes and volatility in select segments of the global equities, fixed income, currencies and commodities markets.

Finally, during the quarter, management completed a strategic review of KCG Hotspot and initiated a sale process which ultimately proved successful.

During the fourth quarter, U.S. equity market volumes picked up with the return of realized volatility to more normative levels over the past five years. KCG’s market share gains in direct-to-client U.S. equity market-making were largely attributable to additive order flow from longstanding clients.”

“Also, individual investors continued to express confidence in the market by allocating an estimated $27.7 billion in net inflows to U.S. equities during the quarter, which represented the highest quarterly total during 2014. In non-U.S. equity market making, KCG continued to develop strategic asset classes that demonstrate promise,” added Mr. Coleman.

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