On Tuesday leading US forex broker FXCM announced key financial metrics for Q1 – Q3 of 2106 and for October alone. Despite the 39.3% drop in net revenue, in the January-September 2016 period FXCM turned to a net income of $71 million from a net loss of $449 million a year earlier.
According to the report, the brokerage’s trading revenue from continuing operations for the nine months ended September 30, 2016, amounted to $196.6 million, 6.4% higher compared to the same period in 2015.
Meanwhile, In the third quarter however of 2016, FXCM turned to a net loss of $39.1 million, regardless of the slight increase in revenue. A year earlier the brokerage reported a net income of $73.7 million for the July-September period. Furthermore, FXCM’s trading revenue went up 2.9% YoY to $59.6 million in the third quarter of 2016.
In addition, FXCM provided trading metrics for October, which was not so good for the broker. Its retail trading volume dropped both MoM (by 6%) and YoY (by 9%) to $305 billion previous month.
In fact, the financial metrics reported by FXCM are quite similar to the ones provided last week by its main peer, Gain Capital. According to Gain Capital’s report, overall October was not very good for the brokerage, however, it turned to a consolidated net profit of $14.5 million in the January-September 2016 period from a net loss of $700,000 a year earlier. As a result, its stock surged by more than 10%.
In all fairness, it is not surprising that FXCM’s financial results for the nine months ended September 30, 2016, are better than the ones posted a year earlier, considering the harsh aftermath of the Swiss franc spike for the company. In order to meet the regulatory capital requirements and continue normal operations, FXCM took a $300 million cash credit from Leucadia. The loan was taken under unfavorable conditions and is still outstanding. The brokerage had to sell two of its subsidiaries to Japanese company Rakuten Securities, and its news and research portal DailyFX to IG Group in order to repay its debt.
The FXCM Group is 50.1% majority owned by FXCM Inc. The rest of the group moved to the hands of Leucadia National Corporation as part of an agreement the two companies signed to amend the conditions of their credit letter agreements.
Forex Capital Markets is one of the few brokers who still operate in the US. It is a registered Futures Commission Merchant (FCM) and Retail Foreign Exchange Dealer (RFED) with the US Commodity Futures Trading Commission (CFTC). It has units registered and regulated with the relevant authorities in the US, the UK, Australia, and France. The broker offers forex, CFDs, and spread betting services.