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GAIN Capital vs FXCM: July and Q2 reports

Aug 12 2014
By
GAIN Capital, operating as Forex.com, yesterday reported Q2 results and July metrics. The net revenue goes down to $69.7 million from $73.1 million the prior year. Net loss is $ 5.2 million. How these results compare to FXCM's?
 
These days the forex market shrinks due to the toughest trading conditions for years with 10 years record low volatility (see graph). GAIN Capital's forex trading is not an exception the company reveals. Their unexpectedly good results in total trading volume are due to their highly diversified portfolio of trading instruments, and especially to the increase in futures trading.
 
Source: Bloomberg via GAIN Capital press release
 
 
Compared to FXCM Gain Capital revealed less revenues and bigger loss (see table). OTC retail wise FXCM is the bigger broker but while it reported a decrease in retail trading volumes GAIN capital showed an increase. The latter company is clearly leading in institutional trading volume. Both brokers revealed an increase in that metric with FXCM showing an explosive growth (12.2% vs 42% respectively).
 

 

GAIN Capital

vs

FXCM

Net revenue of $69.7 million, down 5% from $73.1 million in Q2 2013.

 

 

Revenues of $97.9 million, down 30% versus the same period in 2013.

 

Net loss of $ 5.2 million.

 

 

Net loss of $3.1 million.

 

Retail OTC trading volume of $183.2 billion, an increase of 10.3% from June 2014 and an increase of 29.3% from July 2013.

 

 

Retail customer trading volume of $263 billion in July 2014, 4% higher than June 2014 and 32% lower than July 2013.

 

Average daily retail OTC trading volume of $8.0 billion, an increase of 0.7% from June 2014 and an increase of 29.3% from July 2013.

 

 

Average retail customer trading volume per day of $11.4 billion in July 2014, 6% lower than June 2014 and 33% lower than July 2013.

 

No Data

 

 

 

An average of 345,589 retail client trades per day in July 2014, 1% lower than June 2014 and 24% lower than July 2013.

 

Active retail OTC accounts of 93,374, a decrease of 0.9% from June 2014 and an increase of 44.1% from July 2013.

 

 

Tradeable accounts of 201,794 as of July 30, 2014, a decrease of 6,571, or 3%, from June 2014, and an increase of 7,275, or 4%, from July 2013.

 

Total institutional trading volume of $394.9 billion, a decrease of 17.7% from June 2014 and an increase of 12.2% from July 2013.

 

 

Institutional trading with a July volume of $262 billion, 42% higher than July 2013 (a record for FXCM).

 

Average daily institutional volume of $17.2 billion, a decrease of 24.9% from June 2014 and an increase of 12.2% from July 2013.

 

 

Average institutional trading volume per day of $11.4 billion in July 2014, 6% higher than June 2014 and 43% higher than July 2013.

 

Total retail client assets of $840.0 million, up 76% from $476.8 million

 

Client equity of $1.31 billion, up 10% year-to-date and up 5% from March 31, 2014 is also reported

 

 

Both companies shares sharply decreased with after the announcements were made. Gain Capital's stocks are 10% down to $6 in yesterday after hours trading.  FXCM stocks, however, is now traded above pre-announcement levels.
 
That forex market experiences difficulties is evidenced by the decrease of GAIN capital's institutional retail volume in July. Key OTC retail metrics for the month include:
 

- Retail OTC trading volume of $183.2 billion, an increase of 10.3% from June 2014 and an increase of 29.3% from July 2013. 

- Average daily retail OTC trading volume of $8.0 billion, an increase of 0.7% from June 2014 and an increase of 29.3% from July 2013. 

- Active retail OTC accounts of 93,374, a decrease of 0.9% from June 2014 and an increase of 44.1% from July 2013. 

- Futures contracts of 601,406, an increase of 16.0% from June 2014 and an increase of 38.6% from July 2013. 

- Average daily futures contracts of 26,148, an increase of 5.9% from June 2014 and an increase of 38.6% from July 2013. 

 -Total funded accounts of 131,040, an increase of 0.2% from June 2014 and an increase of 37.9% from July 2013.


Institutional retail metrics:

- Total institutional trading volume of $394.9 billion, a decrease of 17.7% from June 2014 and an increase of 12.2% from July 2013. 

- Average daily institutional volume of $17.2 billion, a decrease of 24.9% from June 2014 and an increase of 12.2% from July 2013. 

- GTX trading volume of $362.8 billion, a decrease of 18.7% from June 2014 and an increase of 3.1% from July 2013. 

- Average daily GTX volume of $15.8 billion, a decrease of 25.7% from June 2014 and an increase of 3.1% from July 2013.


GAIN Capital's key metrics for Q2 2014 compared to Q2 2013 include:

- Net revenue of $69.7 million, down 5% from $73.1 million. 

- Net loss of $5.2 million, or $(0.13) per diluted share, compared to net income of $17.2 million, or $0.44 per diluted share. 

- Adjusted EBITDA loss of $1.6 million, compared to adjusted EBTIDA of $26.9 million. 

 -Retail OTC trading volume of $522.2 billion, up 13% from $462.1 billion. 

- Institutional trading volume of $1.3 trillion, up 27% from $1.1 trillion. 

- Average Daily Futures Contracts of 26,322, up 19% from 22,069. 

- Total retail client assets of $840.0 million, up 76% from $476.8 million. 


Glenn Stevens, CEO of GAIN Capital seems to be content with the results and here is why: "Currency volatility fell to its lowest level in more than 10-years in the second quarter, which resulted in retail OTC revenue capture that was 30% below our trailing twelve month average.  The severe downturn in revenue capture significantly impacted the performance of our retail OTC business and offset substantial growth in our institutional and futures businesses. Despite the poor market conditions, our core operating metrics remained stable across the board, demonstrating our ability to attract and maintain customers and positioning us to benefit when market conditions revert to historical norms".
 
 

 

TAGS: forex.com  FXCM  GAIN Capital  retail  institutional  Q2 2014  operating metrics 

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