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About a month ago, we all got to see the brokers’ profitability report for the first quarter, which revealed to us whose clients were making the most money. This time around, let’s take a look at a couple of brokers and see how much moolah they themselves are raking in.

For today, I wanna focus on FXCM Inc. and Gain Capital. If y’all remember, these two bad boys went ahead with their respective initial public offerings late last year. After a couple of acquisitions, the two are now among the largest brokers in the forex industry.

FXCM: Trading volume and number of accounts up; net income down

A quick glance at FXCM’s numbers shows that trading volume has grown 11%, from $744 billion in Q1 2010 to $822 billion in the same period this year. This may be attributed to the 15% increase in total active accounts under FXCM, which now stands at 139,000.

Revenues for the first quarter came in at $ 94.7 million, up a solid 23% compared to Q1 2010, probably a direct result from the increased number of accounts. However, looking deeper into the income statement, we see that pro-forma net income is actually down 7%, sitting at just $13.7 million.

A large part of the decrease was probably due to increases in compensation and benefits and other expenses. It’ll be interesting to see whether FXCM’s recent acquisitions can create synergies that will help eliminate some of these costs down the road.

Gain: Same story

Not to be outdone by FXCM, Gain Capital, the company that recently acquired dbFX in a bidding war against FXCM, posted its operating results for Q1 2011 as well.

In the three months that ended March 31, 2011, FXCM saw a total of $402.5 billion in retail trading volume, which is a monstrous 38% increase from the same period last year. It also noted that its number of retail accounts increased 18% year on year.

You’d think that with figures like that, the company would be swimmin’ in money, right? But apparently, that wasn’t the case last quarter. Gain’s revenues only came in at $40.4 million in Q1 2011, which is actually 3.8% lower than Q1 2010’s figure. In addition, according to Gain, its net income shrank from $66.0 million to just $1.4 million year-on-year. That’s gotta hurt!

Implications on the retail scene

From the increasing number of retail accounts and the rise in trading volume that these two giants revealed, we can see that there is a growing interest in retail forex trading. We’re growing in number, my fellow pipsters! Of course, this is great news for all of us as it could result in greater liquidity for the forex market down the line.

We should also take note of why these brokers are posting smaller profits. Some brokers claim that regulators’ tighter rules are eating at their bottom lines. Sure, tighter rules and regulations are meant to protect traders like you and I, but they also have their drawbacks.

If indeed these tighter regulations are to blame for squeezing broker profits, we could have a problem on our hands. With stricter rules, regulators run the risk of raising the barriers to entry for new brokers and forcing small-time brokers out of business. This could ultimately leave the entire forex industry solely for the big dogs, which would lead to less options for retail traders in search of brokers.