FNG Exclusive… It wasn’t just the Retail FX brokers suffering in 2019.
FNG has learned that institutional and retail brokerage ITI Capital saw a 24% decline in top line revenue in 2019, from £3.6 million in 2018 to £2.9 million in 2019. The company posted a loss of £2.8 million in 2019, about the same as the prior year.
Despite the loss incurred in 2019 the company said that the board viewed the year as satisfactory for several reasons. The operating turnover reduced following tougher market conditions and increased competition. The yearly loss remained materially in line with the prior year despite the investments in infrastructure, costs relating a number of initiatives and projects that have been undertaken/started in 2019, and investment in key people. Net interest income continued to increase from in 2018. Investments have been made to develop new lines of business which the company said will increase and diversify its income streams.
FCA regulated ITI Capital, which also operates the ITI Markets brand, focuses on emerging markets providing comprehensive dealing and brokerage services for both institutional and retail clients across the world. The company’s customers include Private Clients, Proprietary Trading firms, Banks, Hedge Funds, Institutional Investors and Corporates. The company’s clients are able to trade options, futures, foreign exchange, fixed income and equities, whilst having the facility to finance and repo their assets.
In line with the decline in revenues, ITI saw client cash held down by 18% in 2019 to £36.7 million (2018: £45.0 million).
The company noted that the strategic view of the directors remains positive. The company has demonstrated resilience during Brexit turmoil and client retention remains at a good level. The overall view remains that the brokerage market continues to become more competitive and the revenue margins and fees continues to decrease due to the number of competitors.
As a strategic move for the UK, ITI said it has decided to build an in house advisory function and has invested in acquisition of third parties’ clients. This has affected the cost volume but should start producing good results at the end of 2020. Along those lines, ITI acquired the client book of SVS Securities PLC in May 2020 for £400,000. The company said that the acquisition will substantially increase the number of retail clients of the company, and as a consequence it is expected to have a positive effect in terms of market visibility and revenue generation.
During 2019, along with the new labelled platform Phoenix, ITI continued to improve to move to a more sustainable and organized system. Although the transfer is complete, the positioning of this service suffered from the uncertainty posed by the political situation around the exit from the EU. ITI also started migrating to a single group back office software at the end of the year, which it planned to be completed by the end of 2020. This will streamline processes, improve customer relations and overall reduce costs.
The company said that front and back office technologies have been continuously upgraded. Additional improvements were made in order management, trade surveillance and reporting, settlement, accounting and client reporting systems.