The lack of Volatility across multiple asset classes, including foreign exchange and equities is affecting the revenues of retail brokers. GAIN Capital is the latest company to report a significant decline in volumes in June.
The firm’s trading volumes for June total to $137.7 billion, which is lower by 23.6 percent when compared to May and by 35.6 percent when compared to June. The number translates into $6.9 billion daily. The ADV metric is lower by 11.5 percent when compared to June and by 32.4 percent when compared to a year ago.
Meanwhile, the number of active trading accounts dropped to 118,320. The figure is only lower by 700 month-on-month, but by almost 12,000 looking a year back.
Futures Trading Also Lower
The number of futures contracts traded by GAIN Capital’s clients also dropped when compared to May. The figure stood at 659,220 contacts, which is lower by 17.3 percent when compared to the previous month, but still higher by 5.4 percent when compared to a year ago.
Shares of GAIN Capital continue to hover just above all-time lows. The stock was down 2.4 percent at the market open, trading at $4.10 per share. As of writing the price tanked to $3.99 or five percent for the day. On June 3 GAIN Capital’s stock marked a new all-time low at $3.78 per share.
A soft patch of volatility only spared commodities last month as gold rallied to multi-year highs in the aftermath of the US Fed preparing to lower interest rates.
GAIN Restructuring Ongoing
Despite the market headwinds, the company has been well on its way to launch a new brand for high-value clients with the same name. Currently, the main source of revenue for the firm is its Forex .com brand. The CEO of the company, Glenn Stevens, shared an upbeat view due to the cyclical nature of volatility.
With foreign exchange volatility continuing to hover near all-time lows, GAIN Capital’s revenues are materially affected by market conditions. The company is set to announce its Q2 earnings in the coming weeks. During the first quarter, the firm's revenues slid to a new all-time low impacted by persistently low volatility. Revenues were as low as $50 per million.
