FNG Exclusive… FNG has learned that recently-rebranded FCA licensed online broker London Capital Group (or LCG) saw a significant improvement in its financial results in 2024, with the company seeing positive cash flow in the second half of the year. LCG will also apparently report a statutory profit for the full year 2024.

That comes following a difficult year for the company when LCG posted a Net Loss of £6.0 million in 2023 – more than double 2022’s loss of £2.4 million – after LCG moved to an Introducer model under new managers Dave Worsfold and Matt Basi.

Explaining the positive changes and impact of LCG’s business model change, as well as LCG’s recent rebranding, Managing Director Matt Basi posted the following explanation on social media.

Dave Worsfold and I took up our Directorships at London Capital Group January 2023. It was post-Covid, the company’s offices hadn’t been used for some time, but the sector was still riding a wave of lockdown volatility and volumes.

In our view, Covid had not only papered over cracks that otherwise would have appeared in some firms in our sector, it had spawned even more participants – all competing for the same clients to feed into their trading books/risk models.

Some of the incumbent firms do this brilliantly. I’ve worked at two of them, and London Capital Group is partnered with a couple now. They offer leading technology, fair and competitive pricing, and (importantly in my view) solid balance sheets.

Other firms compete by successfully attracting clients at huge scale internationally, or offering a specific product or service better than the opposition.

The question we had to ask ourselves was, ‘why does the market need LCG?’

Because relationships matter. That was our starting premise…

At the outset, we asked ourselves three questions:

1. Why does the market need London Capital Group?
2. Why does the regulator want to regulate hundreds of firms in our sector with varying standards of conduct?
3. Why would high value clients want to face a firm without a significant balance sheet?

We concluded that sector was ripe for consolidation. Furthermore, as a firm holding less than £15m of client money, London Capital Group was unlikely to be the beneficiary.

This reality in mind, we took the decision to re-model the business. Instead of holding client money, acting as counterparty to client trades and incurring the costs necessary to maintain the ‘Dealing in Principal’ business model, we decided to work in partnership with larger firms.

These partner firms would provide the onboarding, technology, pricing and risk management (thereby relieving us of 80% of our OpEx) and we would focus on service. Our job would be to attract experienced, high value clients through our sales network, introduce them to our partners and manage the ongoing relationships. For this, our partners would pay us a portion of the fees our clients pay them, which are identical to the fees paid by clients the firms onboard direct. Consequently:

• Our clients would benefit from a high touch, personal service from our team, at no additional cost.
• Our partners could attract clients (through us) that they may not necessarily reach through their organic marketing channels.
• London Capital Group could continue to generate revenue, without the operational challenges or conflicts that arise from the Dealing in Principal model (and on a significantly reduced cost base).

Whether we made the right choice will become clearer over the coming years, but the early signs are encouraging. We’ll be reporting a statutory profit for 2024, having returned to positive net cashflow in H2. More importantly, our clients are now housed at large, reputable providers offering best-in-class products and platforms, whilst enjoying a personal relationship with our Sales Trading team.

That’s our USP, and that’s what’s driven the recent rebranding of the business. We’re excited about expanding the new model in the coming months and years, be it by geography, product or personnel. Get in touch with me or the team if you want to know more.