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US retail FX stalwart FXCM declared record performance for 2013. Can this be sustained in 2014?
Despite a stellar performance during the last year, FXCM yesterday reported a month-on-month decline in trading volumes as detailed by LeapRate, with the company’s trading volumes having begun to wane as the second month of 2014 drew to a close.
February’s trading activity at FXCM returned a retail average daily volume of $15.2 billion per day, down 2% from January 2014, whilst retail customer trading volume stood at $305 billion, down 11% from January 2014.
When comparing this protraction on a monthly basis, it depicts a different pattern for the company compared with January, as LeapRate had reported FXCM’s 26% increase in retail trading activity in the first month of this year compared with December 2013.
Institutional average daily volume was $8.1 billion per day during February, down 4% from January 2014, and institutional customer trading for February amounted to $162 billion, down 12% from January 2014.
In terms of specific parameters of interest with regard to the company’s performance during 2013, full year U.S. GAAP revenues headed upwards to $489.6 million, up 17% compared to 2012 and a record for FXCM.
When examining FXCM’s full financial metrics for 2013, it is apparent that the vast majority of the trading volume which contributed to the company’s record performance and 17% increase over that of 2012 can be attributed to two major factors: Firstly, FX firms in all regions experienced a substantial contraction in volumes, and secondly that many firms reported an end to the stratospheric volumes experienced during the first six months of 2013 as last year drew to a close.
American FX companies were somewhat the exception to this dynamic, however, with compatriot Tradestation, the North American subsidiary of MONEX Group having weathered the storm exceptionally well during the last quarter of 2013, contrasting with MONEX Group’s Japanese operations which, in congruence with other Japanese firms, demonstrated a reduction in volumes.
FXCM’s results toward the end of 2013 reflect this, despite its results having been lower than those experienced earlier in the year, however it is worthy of note that December is often a period of lower volumes among retail market participants.
When considering all aspects, 2013 represented a record year for FXCM, with performance concurrent with a majority of large FX firms during the first half of the year, and, comparative to many other firms, FXCM experienced a less dramatic tailing-off as the year drew to a close.
With the commencement of the new year, FXCM began 2014 with promising results as retail volumes were 26% higher than those of December 2013. This paved the way for a hopeful year, however this was thwarted relatively quickly as February’s volumes were slightly lower than January, a theme we’ve seen with most of the other brokers and ECNs which have already reported their volumes for February this year.
A matter of great interest to many retail FX market participants will no doubt be the question as to whether a return to 2012’s slow activity will return, or whether there is swift action that can be taken in order to regenerate last year’s vibrancy across the entire FX industry.