Forex brokers lost more than $400 million in market value last week – LeapRate Exclusive

What will this week bring to the publicly traded retail forex brokers?

Well it likely won’t be much worse than last week.

Three of the industry’s most recognized names, at least to public market investors, saw some tough sailing and lost combined more than $400 million in market value in the July 20-24 trading week. And for a variety of different reasons.

Industry leader and UK giant IG Group Holdings plc (LON:IGG) saw its share drop 8% last week, lopping about $378 million off of its market cap. Despite reporting an 8% rise in annual revenue last week, the retirement of IG CEO Tim Howkins combined with a lukewarm fiscal fourth quarter led investors to sell IG shares – although a lot of that was likely profit-taking after the recent runup in IG’s share price.

Broker share price drop July 2015Overseas, FXCM Inc (NYSE:FXCM) and Gain Capital Holdings Inc (NYSE:GCAP) each also had a week to forget.

FXCM announced plans for a 1:10 reverse stock split meant to guarantee FXCM’s remaining an NYSE-listed company, as well as to attract institutional investors which cannot trade in low-priced shares. The plan, at least in the near-term, seems to have backfired somewhat, apparently causing heavy selling in the stock.

Gain Capital reported record June volumes at its retail trading arm, but has seen its shares continually slip downward since.

Our take?

It appears as though investors have decided to focus on the statement Gain CEO Glenn Stevens made in the volumes release announcement, saying that retail revenue capture in Q2 will come in towards the lower end of the range of the last four quarters. We believe that investors took that as a signal that margins are under pressure at Gain, and possibly at other retail forex brokers as well.

What will this week bring? Stay tuned to LeapRate…


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