Forex Industry News
Swissquote's FX volumes dive by more than a third in Q1
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Low volatility is taking its toll.
Leading Swiss online brokerage Swissquote (a member of LeapRate's Approved List of Forex brokerage firms) announced today its results for the first quarter of 2012. While the company overall did fine -- revenues of CHF 29.2 million and net profit of CHF 6.3 million were both slightly above last quarter's numbers -- the company's eForex business continued to suffer.
For the quarter, Swissquote's FX volumes averaged just CHF 22.4 billion (or about $25 billion) per month, down about 33% from $37 billion monthly in Q4 (and note that Q4's volumes were also down more than 10% from $41 billion in Q3.)
Mainly to blame is extremely low volatility in the main Swiss Franc trading pairs, the USDCHF and EURCHF, the main trading favorites of Swiss investors, following action last summer by the Swiss National Bank to devalue the CHF and cap its value at 1.20 CHF to the EUR.
Swissquote's main two Swiss-based rivals, MIG BANK and Dukascopy, have both responded to the slow volume situation in Switzerland by expanding abroad. MIG BANK recently announced that their Europe subsidiary MIG Capital has received FSA regulation and would be opening a branch in London to serve EU / EEA customers (Switzerland is not an EU member). And both MIG BANK and Dukascopy recently opened offices in Hong Kong to better serve clients in the Asia-Pacific region, the fastest growing Forex market of late. It remains to see what steps Swissquote will take as well to address the domestic eForex situation, which does not seem poised to change any time soon.
Swissquote expanded its presence in the FX business via the acquisition of ACM in October 2010 for CHF 41.7 million (at the time worth $43 million). Swissquote completed the full integration of ACM into its own website and operations last June.
Swissquote's shares responded well to the earnings release, and in early trading Monday on the SIX-Swiss Exchange Swissquote's shares were up nearly 2% to CHF 34.75/
For more on the global Forex industry see the LeapRate Dow Jones Forex Industry Report.
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Swissquote Q1 results
Swissquote results
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Comments
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Tuesday, 08 May 2012
RE:Numbers Seem Off
Thanks for your comment Stephen. The CHF 29.2 million revenues (about $32M) Swissquote reported for the quarter were for the whole company, not just the eForex segment. Swissquote's eForex revenues for the quarter were CHF 7.2 million (about $8 million), as per pg 17 of their Q1 investor presentation, see http://www.swissquote.ch/sqw-group-resources/doc/pdf/presentation/presentation_2012_Q1_e.pdf. That means they are earning about 2.1 pips per round-trip trade, certainly in line with industry standards. I hope that's helpful.
Numbers Seem Off
25 USD yards per month for the quarter = 75 USD yards of client flow. Revenues of 32 USD mio from 75 yards = $427 USD per mio. Is SwissQuote really making $427 (more than 4 pips!!) per mio traded?