FXCM Releases Q2 2012 Highlights and Metrics

Just last week, forex services provider FXCM Inc. (FXCM) released its quarterly financial and operating results for Q2 2012. Let’s dig into the numbers to see how the firm fared over the past three months. (The full statement can be found on FXCM’s website.)

One of the important things that the report revealed was that quarterly trading volume was down by 7% from 938 billion USD in Q2 2011 to 869 billion USD in Q2 2012. Compared to the earlier quarter, trading volume slumped by nearly 12%.

FXCM Q2 Trading Volume
Source: FXCM Q2 2012 Slideshow

Another notable change in their income statement was the 11% drop in revenue from the same quarter last year, as the figure slipped from 103.34 billion USD to 91.68 billion USD.

At first glance, it may appear that FXCM went through a huge slump in Q2 2012. A closer look at the figures, however, would reveal that the decline in both trading volume and revenue were brought about by the drop in volatility during the summer period.

In fact, both total active accounts and client equity have been increasing dramatically over the last three years. Total active accounts climbed steadily from 86,149 in 2008 to more than twice as much at 174,218 as of Q2 2012. Meanwhile, client equity jumped by roughly 20% from 1.05 million USD in 2011 to 1.26 million USD in the second quarter of this year.

FXCM Q2 Active Accounts

FXCM Q2 Client Equity
Source: FXCM Q2 2012 Slideshow

What this means is that FXCM is doing pretty well given the low volatility. The total combined equity of its customers has consistently increased in the last 4 years, rising to 1.25 billion USD. More importantly, active accounts have been trending up.

FXCM knows this, but it appears that they do not want to let their guard down. In the coming quarter, they will take some steps to improve their performance in the low volatility environment.

  • camelman

    does hat mean they are making more money than their customers? Working the other side against their clients?

    • forexninja

      FXCM, and most brokers, makes money through the spread – the difference between the bid/ask price. I do not know exactly if FXCM takes the other side of its clients’ position, but it is possible. It isn’t necessarily bad though because it is simply providing liquidity for the market.

    • FXCM

      Hi camelman, the majority of FXCM clients are using NDD forex execution whereby every order is off-set individually with one of the liquidity providers as opposed to taking the opposite side of client positions to potentially profit from client losses. With NDD execution, FXCM is compensated by a pip mark-up added to the spread which acts as a commission.