Stratos Markets Limited, operating under the FXCM UK brand, has announced a significant net loss for the fiscal year 2023, marking a stark contrasting year’s performance. The company, known for its forex and CFD trading services, revealed a net loss of over $2.5 million, representing a decline of more than 350% compared to the $860,500 profit recorded in 2022. Reduced market volatility primarily caused the sharp downturn, leading to a 37.6% drop in retail trading volumes.
Stratos Markets Limited cited decreased market volatility as a key factor behind the decline in trading activity. The company highlighted the importance of volatility to its operations and explained in its financial report that volatility closely influences market participants’ trading activity:
“Volatility is important for the company and highly correlated to market trading activity. For 2023, volatility was lower than in 2022.”
The VIX index, a widely used gauge of market volatility, was significantly lower in 2023, with the December average hitting 12.10, the lowest since 2019. This lack of volatility curtailed trading opportunities for retail traders, leading to FXCM UK’s 115.7% drop in turnover and a steep 389.5% decline in profit on ordinary activities before taxation, amounting to a $2.2 million loss.
FXCM UK Record Loss in 2023 Amid Declining Trader Activity
In addition to the external challenges posed by market conditions, FXCM UK underwent a major restructuring in 2023, which included a rebranding initiative. On September 10, 2023, the company officially changed its name from Forex Capital Markets Limited to Stratos Markets Limited, following a similar change in its Cyprus-based subsidiary, FXCM EU Ltd, which became Stratos Europe Ltd.
Despite the name change, FXCM will continue to operate as a subsidiary of Stratos Markets Limited, retaining its identity as a prominent retail trading platform. A company spokesperson clarified that the name change was part of a broader restructuring strategy designed to give the firm more flexibility, akin to how Google operates under parent company Alphabet Inc.
Despite the challenges of 2023, FXCM UK maintained a strong capital position. The company held $125.7 million in client cash, down 11.6% from the previous year, while capital resources stood at $62.9 million, only a slight decrease from the $64.4 million recorded in 2022.
The financial report also detailed how Stratos Markets Limited navigated other external challenges, including the collapse of three major US banks in March 2023. The company successfully withdrew most of its funds from Signature Bank before its closure, with any remaining amounts falling within the safety limits of FDIC insurance.
FXCM UK faces the challenge of regaining momentum as market conditions evolve. With its solid capital base and strategic restructuring, the company remains positioned for potential recovery if market volatility rebounds, sparking renewed trading activity.
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