FXCM, the UK operator of the forex and contracts for differences (CFDs) brokerage brand, recently released its financial report 2022, revealing an 11.2% decline in revenue. The company reported a total revenue of $10.74 million, down from $12.09 million in the previous year. However, despite the drop in revenue, the profits of Stratos Markets Limited, formerly known as Forex Capital Markets Limited, significantly improved from the previous year.

According to the Companies House filing, Stratos Markets Limited achieved a profit of $759,159 on ordinary activities before taxation, representing a remarkable increase of 168.1% compared to the previous year. The net profitability of the year also saw substantial growth, reaching $860,552 from $227,982, a yearly increase of 277.5%.

FXCM UK 2022 Revenue Decline

It is important to note that while the profits witnessed a surge, both pre-tax and net figures remained substantially lower than the $5.26 million and $4.86 million reported in 2020. These figures were achieved on an annual turnover of $15.46 million. One contributing factor to the decline in revenue was FXCM UK’s discontinuation of services in the European Union following Brexit. Another EU affiliate is now serving EU clients.

The Companies House filing stated, “The company’s revenue and profitability rely on, among other things, the levels of volatility, which in the FX markets is partly contingent upon the expectations of how much interest rates will change in the future. Prima facie, increased volatility in the markets is favorable to FX and CFD trading and revenue and profitability due to the countercyclical nature of the company’s business model.”

It was noted that market volatility in 2022 was higher than in 2021. However, the factors affecting volatility are diverse, and the economic outlook 2023 appears to indicate a contraction for the UK economy, followed by growth in the subsequent year.

In terms of client assets, the cash held by the brokerage platform decreased by 3.3%, amounting to $142.1 million. Nevertheless, retail trading volume showed a 3.2% increase, reaching $482 billion.

Looking ahead to 2023, FXCM UK has outlined its strategic initiatives, aiming to navigate challenges and optimize growth. The company previously underwent restructuring in London and its European offices in 2021, incurring costs of $2.1 million. This restructuring process continued into early 2022.

Global Rebranding Effort?

Furthermore, the FXCM Group is undergoing a global rebranding effort, renaming its corporate entities as Stratos Markets while retaining the FXCM tradename.

The Companies House filing indicated, “The company will continue to pursue key initiatives to retain and grow its client base in 2023. The company’s objectives for 2023 will optimize revenues from current and new businesses and reduce account acquisition and operating costs. To optimize revenues, the company aims to expand product offerings and functionality, improve conversion rates of new account applicants, and decrease the time it takes between applying for a new account and placing a first trade.”

The company also highlighted its focus on evaluating client trade flows, relying less on a few metrics and more on technologies that provide a holistic view of client trading patterns.

FXCM UK disclosed its exposure to the collapsed Signature Bank in the US in a separate development. However, the company withdrew most of its deposits, leaving only a “small amount,” which falls below the Federal Deposit Insurance Corporation (FDIC) protection limit.

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