World’s most profitable forex brokers

World’s most profitable forex brokers

- in All News, Featured News
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Forex brokers, like any other general financial institution, do business with the main aim to generate revenue and earn profit. We’ve taken a look at the latest annual financial reports of some of the forex brokers operating in three key financial markets – the UK, the US, and Asia.

The data we provide below is based on brokers’ annual financial reports for 2015 or the fiscal year started within the first half of 2015. Please note that some key brands are missing from the list since not all brokers publish financial metrics. The only big international broker missing from the ranking is Oanda.

Our research indicated that US-based Interactive Brokers was the most profitable broker in 2015, with a net income of $458 million for the year. Despite posting a drop of 9.5% from the preceding year, the broker is considerably ahead of the second best (IG Group).

All three most profitable brokers (Interactive Brokers, IG Group and Rakuten Securities) primarily operate in three of the largest forex markets – the US, the UK and Asia, and the brokers are the most profitable ones in their geographical area.

Overall, the year was dynamic and some brokers managed to stay stable, while others were severely affected by the distressed financial markets.

US forex brokers had it tough in 2015

The three main players on the US market, Interactive Brokers, Forex Capital Markets (FXCM), and Gain Capital (the operator of Forex.com) all reported worsened financial results for 2015. Interactive Brokers posted a decline in profit of a single-digit, but it seems the other two encountered a tough year in 2015. Gain Capital posted a drop of 59% and FXCM turned to a loss last year.

In fact, FXCM posted the largest net loss in 2015 among forex brokers, amounting to the extraordinary $932.8 million. In the previous year the broker had a net income of $19.6 million, but it had a harsh beginning of 2015, when the unpegging of the Swiss franc (CHF) from the Euro (EUR) shook the markets, which affected the broker’s performance throughout the year. It even had to draw a $300 million loan from to meet the minimum capital requirements. Its clients suffered heavy losses and generated negative equity balances of combined some $225 million.

Interactive Brokers was 2015’s largest broker in the US, but also worldwide. It should be noted that the broker’s business activities include not only trading services in forex, but also in a number of other instruments, with a focus on stocks and futures, which inevitably reflects on its financial performance.

Net Profit (loss) 2015

Net Profit (loss) 2014

Change

Interactive Brokers

CHF 3.4 mln

CHF 1 mln

9.5%

Gain Capital

$10.2 mln
/net income given/

$24.9 mln
/net income given/

59%

FXCM

($932.8 mln)
/net income given/

$19.6 mln
/net income given/

UK forex brokers remain stable in 2015

In the UK, the largest forex market by trading volume, brokers headquartered in the country performed better than foreign players that operate local units. IG Group was the largest broker by net profit in the UK and the second largest in the world. It generated a profit of £164.3 million, or some $202.4 million, for latest fiscal year (FY) 2016. Note that the broker’s reported period refers to the 1 June, 2015-31 May, 2016, period.

The UK top three also includes Plus500 and CMC Markets.

Meanwhile, Admiral Markets’ profit soared more than 2,000% in 2015. ActiveTrades reported a double growth, and some other key UK brokers, such as IG Group and CMC Markets, posted double-digit increase in profit last year.

However, some of the UK units of foreign brokers saw an improvement from the previous year, but were still at a loss ( eToro UK, Hirose UK). XTB UK was the only one to switch to a profit in 2015. IronFX UK also reported a profit, but posted a double-digit decline from the preceding year. Meanwhile, the UK arm of FXCM turned to a loss and that of Oanda doubled its loss.

Below is a list of UK forex brokers and the profit or loss they generated in 2015 (and 2014). Most of the presented data refers to the UK subsidiaries of brokers and are just a part of the overall performance of the mother company. The top three largest companies, however, (IG Group, Plus500 and CMC Markets) are headquartered in the UK and their businesses are mainly under their UK-licensed units and the provided profit is a more representative sample of the overall performance.

Net Profit (loss) 2015

Net Profit (loss) 2014

Change

IG Group**

£164.3 mln

£131.9 mln

+24.6%

Plus500

$96.6 mln

$102.5 mln

-5.8%

CMC Markets*

£42.48 mln

£34.74 mln

+22.3%

ActivTrades

£9.6 mln

£4.6 mln

+109.5%

FXCM UK

($7.82 mln)

$827,700

FxPro

£1.12mln

(£63.54 mln)

ETX Capital

£968,000

£1.8 mln

-46.2%

HYCM UK

£337,900

£277,600

+21.7%

XTB UK

£268,000

(£686,000)

Iron FX UK

$212,800

$244,000

-12.8%

Admiral Markets

£96,500

£4,500

+2,033%

Hirose UK

(£477,500)

(£831,000)

-42.5%

eToro UK

($717,000)

($878,500)

-18.4%

Oanda UK

(£1.55 mln)

(£779,000)

+99%

LCG UK

(£13.9 mln)
/pre-tax loss given/

£1.1 mln
/pre-tax profit given/

Asian brokers are 2015’s winners;

In Asia no forex broker closed the year in the red. All of them posted double-digit growth in profit for the past FY, except for Monex Group, which saw its profit flat over the year, and KVB Kunlin which saw a growth of 170%.

Note that the following data for Japan-based brokers refers to the financial year ended on 31 March, 2016, while for Hong Kong companies the reporting period matched the calendar 2015 year.

Japanese broker Rakuten Securities was the top performer in Asia (third largest worldwide) with a net income of JPY 15.3 billion, or close to $148 million, for the FY ended 31 March, 2016. This represents an increase of 18.6% from a year earlier.

Japan

Net profit (loss) FY ended Mar 31, 2016

Net profit (loss) FY ended Mar 31, 2015

Change

Rakuten Securities

JPY 15.3 bn
/net income given/

N/A

18.6%

GMO Click

JPY 6.5 bn

JPY 4.9 bn

32.9%

Monex Group

JPY 3.5 bn

JPY 3.5 bn

0%

Money Partners Group

JPY 1.0 bn
/net
income given/

JPY 780 mln
/net income given/

+31.5%
/net income given/

Hong Kong

Net profit (loss) 2015

Net profit (loss) 2014

Change

Guatai Juan International Holdings

HKD 1.0 bn

N/A

26.6%

KVB Kunlun

HKD 94.7 mln

N/A

170%

How did other markets perform?

Outside the above-examined markets, not many notable forex brokers publish financial metrics for 2015. Switzerland’s largest brokers Dukascopy Bank and Swissquote Bank are two of the entities that have provided such information, together with Denmark’s Saxo Bank. In addition to forex, all three entities offer a wide range of other services, including banking.

Of these three, Dukascopy reported the highest profit of CHF 3.4 million, equal to $3.4 million, for the past year. The figure represents a 240% growth. Swissquote Bank, on the other hand, suffered heavily the CHF-related crisis last year. Its net profit dropped more than 91% to CHF 2.1 million, or about $2.1 million, in 2015.

For Saxo Bank the year was even worse. It turned to a net loss in 2015 of DKK 644.6 million, whichh is some $95 million, from a net profit of DKK381.2 million, or $56 million, in 2014.

Net profit (loss) 2015

Net profit (loss) 2014

Change

Dukasopy Bank

CHF 3.4 mln

CHF 1 mln

+240%

Swissquote Bank

CHF 2.1 mln

CHF 23.5 mln

-91%

Saxo Bank

(DKK 644.6 mln)

DKK 381.2 mln

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