IG Group reports year-end, (healthy) volumes for FXCM and Alpari

  • IG Group still does more than half (53%) of its business in the UK.
  • Trading in Equity Indices still accounts for more than one-third (36%) of IG Group revenues, with Forex just 27%.
  • The fastest growing parts of IG Group’s business were Commodities and Binaries, each showing year-over-year growth in the high 30%s, while IG Group’s core Equities, Shares and Forex businesses each did grow, but in the sub-10% range.

The market cheered the results, with IG Group’s stock up 5.3% in heavy trading. Other than it being a good overall day for the markets (FTSE was up 0.65%), it seems as though the market liked management’s statement about June ’11 (the first month in fiscal 2012) being better than June last year.

For IG Group’s complete report of 2011 year end see:

2) Trading Volumes. FXCM (June ’11 – $389 billion) and Alpari (May ’11 – $210 billion). FXCM has made it a very (positive!) habit of publicly announcing its monthly trading volume numbers and some other related stats, fairly soon after each month end. (One of the reasons they are on our LeapRate Approved List of Forex firms). While not showing much growth, FXCM does seem to have settled in and cemented its position as the world’s largest online FX broker, doing nearly $400 billion of combined retail and institutional monthly volume ($317 billion retail and $72 billion institutional in June). The one troubling figure with FXCM remains its low level of client profitability. As reported last week by Forex Magnates, FXCM came in with the worst client profitability numbers of all the major US Forex firms in Q2, with just 22% of FXCM clients making money (among US clients only) – well below the industry average of 25% – despite FXCM’s continued protestations that its “no-dealing-desk” model is better for clients. Our view remains that since all firms in the Forex value chain need to make money (or else why are they in business?), and that at some point or another there is a market maker out there taking the opposite side of every client trade, clients are better off minimizing the number of middlemen between them and the eventual market maker, by trading directly via a reputable market making firm. Nothing wrong with an “agent” no-dealing-desk firm, but as FXCM’s poor client profitability numbers continue to show, clients are not necessarily better off that way.

Alpari announced record monthly volume of more than $210 billion in May 2011. We would note that, unlike FXCM, Alpari does not report its volume on a regular basis, choosing instead to make point announcements here and there, presumably when they have a good month. On a monthly average basis, in our Forex Industry Report we estimate Alpari’s numbers to be much lower, closer to the $100-150 billion per month range. (Recall also that before going public, with its numbers not yet scrutinized by the SEC and a raft of attorneys, underwriters, analysts and the like, FXCM used to report higher volumes than turned out to be the case). Either way, the figures for both FXCM and Alpari point out to us that Q2, in our view, will be a good one for the Forex industry, as volatility increased in each of the currency, commodity, and equity markets worldwide.

We should get more in-depth insight into Q2 figures over the next few weeks, as the public Forex companies (and some others such as Saxo Bank) begin to report:
– IG Group yesterday (see above)
– Gain Capital on July 28
– FXCM likely around or soon after that date
Swissquote on July 29
– Saxo Bank 1H results (likely) in mid August

Stay tuned…

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