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Forex.com Reports 44% Increase in Customer Assets in 2012

If you have been following the forex industry, you probably know that 2012 was a dreadful year for most brokers. Yet, some of the industry giants such as FXCM managed to report overall positive and sustainable results – therefore we were quite curious to see the 2012 metrics of another major player in the industry: Forex.com

 
Throughout the year, Forex.com took over the customers of a couple of brokers who exited the U.S. retail forex market: GFT and FXSol, and acquired the Open E Cry online futures broker. This lead to a 44% increase in the amount of customer assets held with the broker, or a total of $446.3 million. 
 
Forex.com's retail business did ok, however it was the broker's institutional business that deserves special attention. During the first three quarters of the year, institutional volumes kept growing at an impressive rate, reaching $2.0 trillion, compared to the $853.9 billion reported for 2011. 
 
The one thing we were hoping to see in the broker's Q4 and overal 2012 report was the number of active tradable accounts but unfortunately such data was not provided. Our guess is that with the acquisition of the GFT and FX Solutions U.S. customers, Forex.com climbs up into the top 3 of the biggest brokers operating on the American market, reinforcing its strong positions on the market.
 
For the full details on Forex.com's 2012 Q4 and full year results, please read the official press release below.  
 
 
 

GAIN Capital Reports 2012 Fourth Quarter & Full Year Results

Effective execution of diversification strategy puts Company in strong position for growth; Multi-year low in market volatility in the fourth quarter impacted retail results; initial 2013 results indicate renewed retail client engagement

For full year 2012:
-Acquisitions and organic growth drove 44% increase in client assets to $446.3 million
-Net income of $2.6 million; $0.07 per diluted share
-Adjusted net income of $5.5 million; $0.14 per diluted share
-Adjusted EBITDA of $11.1 million

BEDMINSTER, N.J., March 12, 2013 /PRNewswire/ -- GAIN Capital Holdings, Inc. ("GAIN") (NYSE: GCAP), a leading global provider of online trading services, reported its results for the fourth quarter and full year 2012.

"In 2012, we made significant progress in our diversification strategy through both organic initiatives and targeted acquisitions," said Glenn Stevens, CEO of GAIN Capital. "Notable achievements include the growth of our institutional platform, GTX, which more than tripled its revenue year-on-year, as well as the purchase and successful integration of futures broker Open E Cry (OEC), which helped drive a 44% increase in client assets to $446 million at year end. In our core retail OTC business, we expanded our product offering to include more than 450 CFD and FX markets, from 70 in 2011, and launched new international services. Our full year 2012 performance demonstrated our ability to operate profitably in spite of weak market conditions that limited retail client engagement throughout most of the year."

"In December 2012, we successfully completed the acquisition of the U.S. business of GFT Forex, and in early 2013 we acquired the U.S. business of FX Solutions, illustrating that GAIN has become a partner of choice for M&A transactions, with a reputation as a fair counterparty with proven integration skills."

"These initiatives and acquisitions have positioned GAIN to capitalize on improved market conditions in 2013. While remaining low by historical levels, FX volatility rose the first two months of the year, and we are seeing a sequential growth across our business lines. As we move through 2013, our focus is to offer market-leading technology and service in our retail OTC business, scale up our institutional and futures offering and seek out additional acquisition opportunities to further scale our business," Mr. Stevens concluded.  

Retail business

For the full year 2012, GAIN's retail OTC business generated revenue of $127.5 million, compared with $175.9 million in 2011. Total retail trading volume was $1.3 trillion, compared with $1.6 trillion in 2011. Significant developments for the year included the launch of TRADE, a platform giving access to more than 450 CFD and FX markets, as well as new services for the German and Canadian markets, and the acquisition of the U.S. business of GFT Forex.  

"The full year 2012 saw volatility measures drop to multi-year lows, with short upticks of volatility interrupting an overall downward trend. During the year, we took measures to grow our retail business in terms of products, geographic footprint and client assets, while cutting $20.8 million in costs related to the retail business," Glenn Stevens commented. "With higher levels of volatility in the first months of 2013, we believe these factors, combined with our global brand recognition, position us well to profitably re-engage retail traders."  

For the fourth quarter, GAIN reported retail trading revenue of $22.9 million, compared with $29.8 million a year earlier, while retail OTC volume fell to $298.8 billion, from $366.4 billion in the fourth quarter of 2011.

Institutional and futures businesses

For the full year 2012, GAIN's institutional business generated revenue of $15.6 million, compared with $4.4 million in 2011. Total institutional volume for the year was $2.0 trillion, compared with $853.9 billion a year earlier. Notable developments for the year included the expansion of our execution desk and the appointment of Joseph Wald to lead the institutional business. 

"This was a landmark year for our GTX institutional business, which rapidly gained traction among key institutional customers, including banks, hedge funds and high frequency traders, even as many of our competitors saw declining volumes," said Glenn Stevens. "With our new leadership structure in place, we are confident that GTX is poised to enter a new phase of growth, reaching new clients with an expanded product offering."

In the fourth quarter, the institutional business reported revenue of $3.4 million, compared with $1.3 million in the fourth quarter of 2011. Institutional volume for the quarter was $538.4 billion, compared with $386.4 billion a year earlier.  Our institutional business's results in the fourth quarter of 2011 included high-volume customers acquired from Deutsche Bank earlier in the year.

OEC, GAIN's exchange-traded futures business which was acquired in August 2011, reported revenue of $4.4 million for the fourth quarter, with daily average revenue trades of 13,000 during the quarter.

"OEC is already making a significant contribution to GAIN's overall revenue, highlighting the potential of the futures market," said Glenn Stevens. "We will continue to scale OEC in 2013, boosting margins and exploiting synergies with our retail OTC offerings."

Full Year Metrics

- (Comparisons below are referenced to 2011)
- Net revenue of $151.4 million, compared to $181.5 million
- Net income of $2.6 million, compared to $15.7 million
- Adjusted EBITDA* of $11.1 million, compared to $36.6 million
- Adjusted net income* of $5.5 million, compared to $21.7 million
- Diluted EPS of $0.07, compared to $0.40
- Adjusted diluted EPS* of $0.14, compared to $0.56
- Total retail trading volume of $1.3 trillion, compared to $1.6 trillion
- Total institutional trading volume of $2.0 trillion, compared to $853.9 billion
- Total retail client assets of $446.3 million, compared with $310.4 million.
 

Fourth Quarter Metrics

- (Comparisons below are referenced to 4Q11)
- Net revenue of $32.4 million, compared to $31.6 million
- Net (loss) of $(3.8) million, compared to $(3.3) million
- Adjusted EBITDA* of $(5.0) million, compared to $(3.1) million
- Adjusted net (loss)* of $(3.3) million, compared to $(1.6) million
- Diluted EPS of $(0.11), compared to $(0.10)
- Adjusted diluted EPS* of $(0.09), compared to $(0.05)
- Total retail trading volume of $298.8 billion, compared to $366.4 billion
- Total institutional trading volume of $538.4 billion, compared to $386.4 billion
- Daily average revenue trades of approximately 13,000 in our futures business
 
TAGS: Forex.com  forex trading  forex metrics  forex trading platform  Q4 2012  retail forex  institutional forex  forex trading   GFT  FXSol  FXCM 

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