By Victor Golovtchenko
Shares of FXCM Inc (N:FXCM) have been trending higher today, with no material events reported by the company. What could be the main factor behind the 15 per cent increase in today’s trading on the New York Stock Exchange is the realization by investors that the foreign exchange and CFDs brokerage is likely to have a pretty good quarter.
Trading volumes across the spectrum have been rising since the start of 2016 and halfway through the quarter the relentless volatility in major currency pairs has remained broadly intact.
Looking at the first half of the first quarter of 2016, institutional venues which are publicly reporting their trading volumes such as Hotspot and FastMatch (where FXCM is one of the biggest shareholders) on a daily basis have already reported between 30 and 40 per cent growth.
Electronic Communications Network (ECN) for foreign exchange trading FastMatch, where FXCM still holds a 35 per cent stake, has not only managed to recover after the post-Swiss National Bank (SNB) slump, but is currently registering about 56 per cent higher volumes for 2016 on an average daily volume basis.
FXCM's shares are trending higher with higher volumes and a prospective FastMatch sale around the corner, Source: Google (O:GOOGL) Finance
With a sale of FastMatch to ICE circulating the wires last summer, the estimated valuation that was given was close to $200 million. Almost half a year later, the company has continued its slow but steady recovery in trading volumes. After the ECN recently dropped a number of fees and introduced symmetric last look trading, its market share could continue to rise in the coming months.
With volumes reports of major foreign exchange and CFDs brokers for the first month of 2016 being closer to the first part of 2015, investors are acknowledging the positive news. While shares of FXCM have grown close to 15 per cent as of writing, GAIN Capital’s market capitalization has increased by only 2 per cent in today’s trade (as of writing).
A year after the Swiss franc crisis which hit a number of Straight Through Processing (STP) brokers, exposing them to bad credit, FXCM continues to remain in business defying all odds. While shareholders of the company have suffered a massive blow, the firm continues to be in business and is providing one of the very few options for STP trading in the U.S.
Despite today’s rally, shares of FXCM Inc (NYSE:FXCM) are currently trading about 56 per cent lower than the recent highs marked on the 30th of December 2015.