After changing its name from KVB Prime UK Limited to DCFX Europe Limited, the company originally focused on providing FX investment services to retail clients is now transitioning its business model to act as an intermediate broker, consolidating liquidity provision to institutional and elective professional clients.
A report just published by Dupoin UK Ltd, the brand operator, indicated that the company has also been considering entering the prime of prime brokerage model.
Why DCFX Decided to Change Its Business Model
Dupoin claimed that the challenges faced by KVB Prime UK, and subsequently DCFX, stemmed from Covid-19. Despite strong growth in the retail FX brokerage sector, the pandemic created several challenges for service providers.
"First, the market was becoming oversupplied, with hundreds of firms competing for a finite number of customers," the company commented in its official UK Companies House filing. "Many of these firms have no discernible unique selling point, leaving them to compete solely on price and leverage , driving down spreads and increasing leverage across the industry."
Given the competitive nature of the retail FX market, the firm has formulated a business model that provides institutional and elective professional clients with access to a wide range of liquidity providers.
This enables the company to compete based on the quality of its market connection rather than on price and leverage. DCFX is also contemplating extending its business model to include prime of prime brokerage to serve B2B clients' needs.
DCFX Still in the Red, but Reducing Losses
Regarding the company's financial performance, it reported data for the last nine months of 2022, from 1 April to 31 December. Turnover during this period amounted to a deficit of £20,886, compared to £106,210 reported for the fiscal year ending 31 March 2022 (FY22).
However, the company managed to generate "other operating income" of £484,591, resulting in an ultimate financial loss of £45,534 for the reported nine months, compared to a much higher deficit of £508,626 in FY22. Looking at the balance sheet, the net assets shrank to £169,397 from April to December 2022, compared to £211,931 reported for FY22.
The Company Talks about Risks
The company is still in its early stages of development, with revenue generated only from outsourced service fees so far. It received shareholder funding in March 2023 and started client onboarding in the second quarter of 2023.
The report additionally highlighted key risks, including compliance and regulatory, financial and liquidity , credit, and market risks. However, the Board remains confident in the company's ability to manage these risks, backed by a commitment from shareholders for ongoing support.
