Do not invest more money than you can afford to lose.
SMN weekly regularly keeps track of publicly-held leading forex brokers’ market capitalization and compares their stock price performances. As former market cap champion Interactive Brokers Group, Inc (NASDAQ:IBKR) is out of the retail market, and therefore out of our FX Market Cap Chart, IG Group assumes the leader position.
| FX Broker | Market Cap (in billions of dollars) | Change % | |
| May 16, 2016 | Aug 23, 2016 | ||
| 1. IG Group | 3.95 | 4.54 | 14.9 |
| 2. Plus 500 | 0.99 | 1.10 | 11.1 |
| 3. CMC Markets | 1.10 | 1.02 | -7.3 |
| 4. GMO Click | 0.80 | 0.82 | 2.5 |
| 5. Monex Group | 0.73 | 0.71 | -2.7 |
| 6. XTB | 0.38 | 0.34 | -10.5 |
| 7. Gain Capital | 0.34 | 0.31 | -8.8 |
| 8. KVB Kunlun | 0.21 | 0.21 | – |
| 9. Money Partners Group | 0.19 | 0.16 | -15.8 |
| 10. Hirose | 0.05 | 0.07 | 40 |
| 11. FXCM | 0.06 | 0.05 | -16.6 |
Previous week Interactive Brokers announced its decision to restrict US leveraged forex trading to clients with at least $10 million in deposited assets (as of September 1, 2016). This basically means that the brokerage leaves US retail FX market and this is why it no longer appears in our FX Market Cap Chart. As a result, IG Group Holdings PLC (LON:IGG) becomes the largest retail FX broker in terms of market cap with its total dollar market value of shares currently coming in at $4.54 billion.
Earlier in June, IG Group published its financial results for the year 2016, which were ahead of expectations: the company generated £456.3 million net trading revenue for that period, 14% up from FY 2015.
Second in line comes another LSE-listed broker, Plus500 (LON:PLUS), whose market capitalization currently amounts to GBX 834.66M (USD 1.10 billion). The figure represents an increase of more than 11% from May, and the broker once again outperforms CMC Markets PLC (LON:CMCX). Actually, CMC lagged behind its rivalry in the Brexit aftermath, as Plus500 was the first among LSE-listed companies to recover.
CMC Markets listed on the LSE in February this year and since then its stock prices have increased their prices by more than 16%, which makes it one of the most successful FX broker IPOs of 2016.
Hirose Tusyo Inc. (TYO:7185) is another success story. The company currently ranks 10th in terms of market cap, outshining top US brokerage FXCM. By August 23, Hirose’s total dollar market value of shares amounts to JPY 7.45 billion or USD 0.07 billion, rising by the impressive 40% from May.
With its market capitalization coming in at $48.57million, FXCM (NYSE:FXCM) ranks last in our chart. The US brokerage still repays its unfavorable debt to Leucadia. FXCM needed the loan in order to meet its regulatory-capital requirements and continue normal operations after the Swiss Franc spike. However, previous week the company was charged by US regulator over undercapitalization, with more than 19-month delay.
Yet another change in the market cap ranking of FX brokers since May is that Hong-Kong based KVB Kunlun (HKG:8077) gained advantage over Money Partners Group (TYO:8732) and assumed the 8th place. In fact, the total dollar market value of shares of the Hong-Kong based company remained flattish, however, the stock price of Money Partners soared by almost 16% from May.
Tony Smith
Jeffery, I appreciate your comparisons of the market caps of FX Brokers.
One possible addition to the comparison that I think would interest investors is a comparison of the valuation multiples (Enterprise Value / Revenue, and Enterprise Value / EBITDA) for the companies. For example, Gain Capital is larger than CMC Markets and Plus500 in terms of revenue and EBITDA, but its market cap is about 1/3 of those two companies.
Gain does not appear to get credit for the value of its institutional GTX business, and part of the discrepancy may due to lack of credit for Gain Capital’s large cash balance. The multiples are out of whack. This post about Gain Capital from the Value Investor’s Club web site may be of interest relative to its under-valuation:
https://www.dropbox.com/s/cnupy6olz0n9wfy/GCAP.pdf?dl=0
There may also be other anomalies in terms of the valuation multiples of the FX companies, and I think investors would appreciate the ongoing comparison in addition to market caps. What do you think?