Rebalancing and hedging in client portfolios drove volatility in the month of March, helping GAIN Capital reach record highs.
Volatility is driven by the coronavirus
The month of March witnessed clients rebalancing and hedging their portfolios because of the coronavirus pandemic. This activity led to a total transaction volume of $388.6 billion in March. The forex markets had remained relatively quiet during the year but arch turnover is breaking records for the industry. The March figure has not just topped the turnover from March 2019 but also grown to 2x the 12-month daily average on the platform.
The retail trading activity on the platform went up by 95% month on month. In February 2020, it totaled $199 billion. The March number is more than twice the daily average on a year-to-date basis. On a yearly scale, the platform witnessed its OTC volumes going 130% over its year-on-year figures. In March 2019, its OTC retail volume was $169 billion.
Good news for GAIN as ADV rises
The average daily volumes (ADV) at the group for March 2020 were $17.7 billion marking a 78% month-on-month rise from the $9.9 billion recorded in February 2020. On a year-on-year basis, the figure is more than double. In March 2019, the ADV was $8 billion.
Before coronavirus fears started gripping the world in March, forex volumes remained lackluster. January and February 2020 were not eventful because of which profitability suffered across all quartered. In Q4 2019, GAIN Capital’s net revenues dropped 33% on a year-on-year basis. In Q4 2018 the revenue was $79.9 million but in Q4 2019 it was $53.3 million. In the year ending December 31, 2019, the firm witnessed 35% drop in net revenue on a year on year basis. It earned $358 million in fiscal 2018 which came down to $234 million in fiscal $234 million.
The futures volume has also come down and the platform suffered a net loss of $31.2 million in the fourth quarter. In Q4 2018, the figure was just $0.7 million.
The stock of GAIN Capital is up by 60% after reaching yearly lows. The stock is up because of news that INTL FCStone is planning to acquire the platform.