Gain Capital, the largest US retail forex broker in terms of client assets, has reported rather disappointing results for the first quarter of this year. According to the data for the period that ended on March 31, the broker had an adjusted net loss of $18.6 million. In comparison, in the same period of last year Gain Capital had a profit of $16.9 million.
In terms of trading metrics Gain Capital’s retail segment (Forex.com, City Index) performed poorly with the over-the-counter trading volume standing at $619.3 billion – down 28.1% from Q1 2016’s $861.7. The average daily volume declined even more – 29.6%, to $9.5 billion.
The only retail metric that is positive, is the number of active OTC accounts – up 3.3% from Q1 2016, to 136 829.
This, most likely, is the result of the acquisition of FXCM’s clients after the broker’s dramatic exit of the US market in February. According to the report, the acquisition of nearly 13 000 active client accounts cost Gain Capital $5.1 million and brought $140 million in client assets to the Forex.com brand. Additionally, between April 1 and May 4, Gain Capital paid another $1.4 million to FXCM. The former FXCM clients have had an average daily trading volume of $1.1 billion.
In its statement Gain Capital explains the retail segment’s poor performance with lower market volatility and narrowing of average trading ranges weighed on revenue capture.
The institutional segment GTX, however, performs much better. The ECN volume stood at $759.6 billion, growing 42.9% over the year, while the daily average volume grew 41%, to $11.7 billion.
The swap dealer volume grew 20.8%, to $225.5 billion, with a daily average of $3.5 billion.
“Although the first two months of the year presented challenging market fundamentals for our business, characterized by low volatility and narrow average trading ranges, we remain optimistic about the growth prospects for the company,” commented Glenn Stevens, CEO of GAIN Capital. “Market conditions improved in March and have continued to improve in April, with revenue capture returning to a normalized level consistent with our trailing twelve month average of $107 per million.”
Despite Glenn Stevens referring to improving market conditions in April, Gain Capital’s April retail OTC trading volume continued to decline, both on monthly and annual basis – by 22.7% and 27.7%, respectively and stood at $185 billion. The average daily volume, logically, also dropped and was $9.3 billion. The number of active OTC accounts in April remained flat, compared to March.
In April the institutional segment of Gain Capital did not perform very well either, in comparison to the preceding month. The data reveals that the ECN trading volume dropped 15.2%, to $230.5 billion. Still, on an annual basis it grew 41.2%.
The swap dealership also declined – both over the month and over the year, by 25.7% and 28.1%, respectively.
Gain Capital Group was established in 2003 and went public on the NYSE in 2010. The company serves retail and institutional clients under the trading brands Forex.com, City Index, GTX, and Gain Capital. It is active in North America, Europe and the Asia Pacific regions. The broker offers trading in forex, commodities, and global equities. Its largest retail forex broker, Forex.com, also offers white label solutions for other forex brokers, operating throughout the world.