Exclusive: GKFX UK continues Revenue drop but cuts losses in 2021
FNG Exclusive… FNG has learned via regulatory filings that FCA regulated FX and CFDs broker GKFX Financial Services Ltd has seen a continued drop in Revenues but cut its losses in 2021, as the company continues its transition from Retail to Institutional brokerage, and hires new management.
After reporting a near £9 million loss in 2019 and £2.9 million in 2020, GKFX UK cut its losses in 2021 to £2.3 million. Revenues at GKFX UK fell however from £2.7 million in 2020 to just £1.2 million in 2021 – revenues at GKFX UK were as high as £94 million in 2016 and £60 million in 2017. But that was when it operated under the “GKFX” brand, before moving to the institutional-focused GKPro brand over the past couple of years.
Trading revenues for the year were generated predominantly through volume rebates with a counterparty that is related to GKFX UK by common ownership. The risk management strategy is based on highly automated flow management which dynamically hedges client exposures and risk. The level of such revenues is influenced by the volume of trades executed on behalf of the company’s clients.
In addition, the company also provided services to the same counterpart, which included procuring outsourced services and supplies, which the company in-tum, developed and provided on to the counterpart on a cost-plus basis. This generated significant increases in both non-trading revenues and administrative expenses. This was a short term arrangement and completed in November 2021.
At the end of 2021, the company hired former FXCM, IKON Finance, and Britannia Global Markets executive Adam Dougall as CEO of GKFX UK. And in early 2022 it added ETX Capital alum David Papier as Head of Institutional Sales.
As a result of implementing strategic changes during 2019, revenues and expenses have significantly reduced from historic levels. Revenues reduced as the company’s retail business was curtailed (in favor of working only with Professional and Wholesale clients under the GKPro brand), and expenses decreased primarily as lower staffing levels were required to support the much smaller ongoing client base. GKFX UK reduced staffing from 81 employees in 2019 to 35 in 2020, and to 21 employees in 2021.
The GKFX group is controlled by Turkish businessman Kasim Garipoglu, through his Global Kapital Group (GKG). In 2019 GKG restructured its operations, moving the Retail FX brokerage business from GKFX UK to AKFX Financial Services Ltd, based and regulated in Malta. AKFX is a related party to GKFX by virtue of common ownership, and AKFX (Malta) now operates the “GKFX” brand. The FCA regulated UK company now runs under the GKPro brand, as noted above aimed at Professional and Wholesale clients. In addition to the GKPro / GKFX brands, Global Kapital Group owns Australia based FX broker FairMarkets, which it acquired in 2020.
GKFX UK’s 2021 income statement follows: