Japan forex revenues down 30% in first nine months 2014 at Tradition

As the third quarter of this year got underway, it became very clear that the extended and somewhat concerning period of low trading volumes which plagued so many FX firms and bank FX desks had well and truly come to an end, punctuated by a total shift in the opposite direction resulting in record figures for many companies.

A similar dynamic is apparent at Swiss multi-asset institutional electronic trading Compagnie Financiere Tradition, which announced its third quarter earnings today. The Group reported consolidated revenue of CHF 197.9m in the third quarter 2014, down 2.8% in constant currencies from the equivalent quarter last year.

The Group’s consolidated adjusted revenue was CHF 212.4m, down 2.1% at constant exchange rates with IDB down 1.9% and Non-IDB down 8.1%. For the first nine months of the year, consolidated revenue was CHF 623.3m compared with CHF 679.5m in same period in 2013, a decrease of 8.3% at current exchange rates or 6.3% in constant currencies.

For the same period, the Group’s consolidated adjusted revenue was CHF 664.7m compared with CHF 727.9m in 2013, a decrease of 6.7% at constant exchange rates. The adjusted revenue from interdealer broking business (IDB) was down 6.1% in constant currencies while the forex trading business for retail investors in Japan conducted via subsidiary Gaitame (Non-IDB) was down 29.6%.

Compagnie Financiere Tradition has demonstrated innovative prowess over the last year, with the development and launch of its ParFX trading platform which gained the support of many banks across Western markets, subsequent to which the period of inactivity across the markets has become apparent in its figures.

Indeed, during the summer of this year, Gaitame, the Japanese retail FX firm owned by Companie Financiere Tradition, experienced a 37.2% decline in revenues in the first quarter of this year, setting the scene for the months ahead. Whilst some ground has been gained in reducing this figure in the last quarter, it is still evident that the firm’s home-market institutional business has experienced less of a dramatic downturn in revenues.

When considering the last quarter of the fiscal year compared to earlier periods during 2014, the 2.8% decline in currency trading revenues is not as grave as the consolidated revenue for the first six months of the accounting period of CHF 425.4 million, against CHF 475.9 million in the first half of 2013, a decline of 7.8% in constant currencies.

As the entire industry continues to pull its revenues out of the doldrums, a clearer way ahead may appear from which Compagnie Financiere Tradition can begin to reap the benefits of its investment in institutional platform development.

For the full announcement from Tradition, click here.

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