F 4 - Annual Report
A 2013 wa # 7894 / a ' ' / # ' % ' # ' ' ( # ' 2 # ' 3& ,# # # ( # F 4 4 & # 0 RECORD REVENUES 6 ' 2013 Adjusted pro forma revenues of 483.8 million,/ 7894 : up 16% from 2012 2 2013 Adjusted pro forma EBITDA of 158.0 million, 7894 : ( ' up 40% from 2012 & .40% EBITDA margin on net revenues # 0 * RECORD RETAIL AND INSTITUTIONAL TRADINGVOLUMES 339 0 7 Our retail customers traded 4.1 trillion, up 13% from 2012 ( ' # 7 & ' ' ' -Our institutional customers traded 2.0 trillion, up 72% 78 from 20123 Retail account growth was 7% year-over-year, and we # !*) " ; / . ) ; / . % ' 3 finished the year with 183,679 active accounts ' 3 LIQUIDITY MATTERS? # 5 4 & 3 5 4 & ued & ' ' 78 & ! " # % & ' ' & ' ( ! ) * ' * ! * ! "* REMEMBERING WHERE YOU STARTED MATTERS ( / ' 1 @@@ / # # , - !*) ' funds ' DIVERSIFICATION MATTERSEDUCATION MATTERS. & ' % ' ' # ' / # ' ' & ' ) # ' * ' 0 1 ' # 2 # 3 4 & 5 2 & & # ' 78# ' ( . # #
' ' % ' ' ' ( 97 ' # ' & % ' 6 % ' & & # 97 ' / ,# ' 97 1 ; 4 # 78 : ? ? ' / ,# 2 97 # ( ; ' ' & ' & ( 97 # # L LOOKING FORWARD MATTERS ' # 97 / & ! ! ( ' ' ' % ' ' 97 ( ' ' # ' ' ' # G # 78 ' Institutional 2 . / # 3 ' 0 / ,# ' & # ' . 4H. & & ' # 0 . & & G & ORGANIC GROWTH INITIATIVES: GAININGMARKET SHARE MATTERSRetail 2 & 7894 3 # 5 4 & 5 ' ' & 78 I ' # ; # . A 78 97 J ( K F ' 78# & ; ' 97 % ' & ; # # 97 ' . # / A 4 & & # & 6 ' 7894 ' . # # & ' . ,# ' ; ' 97 # # Sincerely, # & I ' ( 78# ( # # Dew Niv ' Chairman and Chief Executive Officer ' & / # ' &
FXCM BY THE NUMBERS:? F?;AA/ M 4. ;?ARetail5Started in1999RegulatedEntities15years of awardwinning forextrading services75%of Revenues8001325%Offices inInstitutionalemployee’s world widedifferentcountriesof Revenues
2 MAIN REVENUE STREAMS?; ./3 H /MA / N / M.36Over183,700active accounts worldwidein 2013 – up 7% 2differenttrading platforms:Trading station,Trading Station Mobile,MetaTrader 4, MirrorTrader, Ninja Trader,and ZuluTradeLucid trillion inInstitutional TradingVolume for 2013 – up 72% 81.9million in Revenuesfor 2013 4.1TRILLIONin Retail TradingVolume for 2013 – up 13% 10BILLIONFastMatch does on averagein trading volume a day
FXCM: EXECUTING ITS STRATEGY IN 20137N33 O;.? I/FI3/FI A2013Adjusted Pro Forma Revenues of 483.8 million 16% from 20122013Adjusted Pro Forma EBITDA of 158.0 million 40% from 20122013Adjusted Pro Forma EPS of 0.76/share 31% from 20122013GAAP EPS of 0.44/share 19% from 20122013After-tax cash flow from operations of 123.6 million 21% from 2012Revenues (1) ( Millions)EBITDA (1) ( Millions)Pro Forma EPS (1)!* 484!,P !," ! P !,, !, ! , 417! !, 2013! " 19%! , ! ! 0.37! * 21% 124 102!P ! !" 20122013 31% 0.58! * 2013After-Tax Cash fromOperations ( Millions) 0.44! * 0.76! P ! ) 1132012GAAP EPS! , 40%! 2012! ,* 158! " 16%2012201320122013
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2013orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period fromtoCommission file number 001-34986.FXCM Inc.(Exact name of registrant as specified in its charter)Delaware27-3268672(State or other jurisdictionof incorporation or organization)(I.R.S. EmployerIdentification No.)55 Water Street, FL 50, New York, NY 10041(Address of principal executive offices) (Zip Code)(646) 432-2986(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each className of each exchange on which registeredClass A common stock, par value 0.01 per shareNew York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesNoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YesNoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for the past 90 days. YesNoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files). YesNoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) isnot contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerNon-accelerated filer (Do not check if a smaller reporting company)Accelerated filerSmaller reporting companyIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) YesNoAs of June 28, 2013, the aggregate market value of the registrant’s voting and non-voting common equity held by nonaffiliates was 623,789,933As of March 12, 2014, there were 45,752,292 outstanding shares of the registrant’s Class A Common Stock, par value 0.01per share.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s Definitive Proxy Statement relating to its 2014 Annual Meeting of Stockholders to be filed withthe Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal yearcovered by this Form 10-K are incorporated by reference in Part III, Items 10 – 14 of this Form 10-K.
TABLE OF CONTENTSTable of ContentsItemNumberPagePART I11ABusinessRisk Factors1101B23Unresolved Staff CommentsPropertiesLegal Proceedings3434344Mine Safety Disclosures35PART II5677A899A9BMarket for Registrant’s Common Equity, Related Stockholder Matters and IssuerPurchases of Equity SecuritiesSelected Financial Data3637Management’s Discussion and Analysis of Financial Condition and Results of OperationsQuantitative and Qualitative Disclosures About Market Risk3778Financial Statements and Supplementary DataChanges in and Disagreements With Accountants on Accounting and Financial DisclosureControls and ProceduresOther informationPART IIIF-18181831011Directors, Executive Officers and Corporate GovernanceExecutive Compensation8484121314Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersCertain Relationships and Related Transactions, and Director IndependencePrincipal Accounting Fees and ServicesPART IV84858515Exhibits, Financial Statement SchedulesSignatures8687i
TABLE OF CONTENTSForward-Looking StatementsThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect our current views with respect to, amongother things, our operations and financial performance. You can identify these forward-looking statements by the use of wordssuch as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,”“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words.Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be importantfactors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believethese factors include but are not limited to those described under the section “Risk Factors” in Item 1A of this Report.Additional risk factors may be described from time to time in our future filings with the Securities and Exchange Commission(“SEC”). We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of newinformation, future developments or otherwise, except as required by law.FXCM Inc. is a holding company that was incorporated as a Delaware corporation on August 10, 2010 and its sole assetis an equity interest in FXCM Holdings, LLC, of which FXCM, Inc. is the sole managing member. Unless the context suggestsotherwise, specifically, where “Holdings” refers to FXCM Holdings, LLC and the “Corporation” refers to FXCM Inc.,references in this report to “FXCM,” the “Company,” “we,” “us” and “our” refer FXCM Inc. and its consolidatedsubsidiaries.
TABLE OF CONTENTSPART IItem 1. BusinessOverviewWe are an online provider of foreign exchange (“FX”) trading and related services to approximately 183,679 active retailcustomers globally. We offer our customers access to over-the-counter (“OTC”) FX markets through our proprietary technologyplatform. In an FX trade, a participant buys one currency and simultaneously sells another, a combination known as a “currencypair”. Our platform seeks to present our FX customers with the best price quotations on up to 59 currency pairs from up to 35global banks, financial institutions and market makers, or FX market makers, which we believe provides our customers with anefficient and cost-effective way to trade FX.We primarily offer our customers what is referred to as an agency model to execute their trades. Our agency model isfundamental to our core business philosophy because we believe that it aligns our interests with those of our customers andreduces our risks. In the agency model, when our customer executes a trade on the best price quotation offered by our FXmarket makers, we act as a credit intermediary, or riskless principal, simultaneously entering into offsetting trades with both thecustomer and the FX market maker. We earn trading fees and commissions by adding a markup to the price provided by the FXmarket makers.In 2012, in order to accommodate our expanding customer base, we began to offer our smaller retail clients the optionto trade through a principal model. In the principal model, we set the price and act as the counterparty for our customer’stransactions, earning revenue on our trading gains or losses. We do not simultaneously offset each trade with another party.We also earn other forms of revenue such as fees earned from: referring broker fees and white label arrangements withother financial institutions to provide platform, back office and trade execution services, trading in contract-for-differences(“CFDs”), trading in equities and equity options, payments for order flow, FX market prices and other various ancillary FXrelated services and joint ventures.We operate our business through two segments: retail trading and institutional trading. Our retail trading segmentaccounted for 77.4% of our total net revenues in 2013. Our institutional trading segment, FXCM Pro, offers FX trading servicesto banks, hedge funds and other institutional customers on an agency model basis. In addition, we own a 50.1% controllinginterest in Lucid Markets Trading Limited ("Lucid"), an electronic market-maker and trader in the institutional foreignexchange spot and futures market. Our institutional trading segment accounted for 22.6% of our total revenues in 2013. Forfinancial information regarding our segments, see Note 26 to our consolidated financial statements in “Item 8. FinancialStatements and Supplementary Data”.Our operating subsidiaries are regulated in a number of jurisdictions, including, but not limited to, the United States(“U.S.”), the United Kingdom (“U.K.”), where regulatory passport rights have been exercised to operate in a number ofEuropean Economic Area jurisdictions, Hong Kong, Australia and Japan. We maintain offices in these jurisdictions, amongothers. We offer our trading software in 17 languages, produce FX research and content in 17 languages and provide customersupport in 19 languages. For the year ended December 31, 2013, approximately 87.3% of our retail customer trading volumewas derived from customers residing outside the United States. We believe our global footprint provides us with access toemerging markets, diversifies our risk from regional economic conditions and allows us to draw our employees from a broadpool of talent.Our Products and ServicesWe offer three types of accounts, each designed for a particular type of retail FX trader. Our Basic account is designed forthose new to FX trading and it enables traders to open accounts between 50 and 4,999. These accounts offer trading in smallincrements, providing 24/7 support and access to DailyFX resources. Our Premium accounts are available to clients depositingbetween 5,000 and 24,999. These accounts offer the same benefits as our Basic accounts, but also allow corporate entityaccounts, include additional customer support options and allow customization of account type and setup. Our Basic andPremium level accounts are available utilizing the agency or principal models. Our principal model account may offer traders alower transaction cost, however, the large majority of our clients choose the agency model. We also offer Active Traderaccounts that are designed for experienced, high volume traders and generally require an opening deposit of 25,000 or tradingvolume of at least 10 million per month.1
TABLE OF CONTENTSWe also offer trading in a growing number of other financial instruments. While some customers may choose a retail FXbroker based on the breadth of products they offer, we limit the products we offer to those that meet our risk, regulatory andtechnology criteria.Spot FX PairsWe offer spot FX trading in over 59 currency pairs. Of these pairs, our most popular seven currency pairs represent over69.1% of all trading volume, with the EUR/USD currency pair being the most popular, representing over 21.7% of our tradingvolume in 2013. We add new currencies to our list provided they meet our risk and regulatory standards. We do not allowtrading in currencies from nations that have prohibitions on the trading of their own currency.Contract-for-DifferenceWe offer our non-U.S. customers the ability to trade CFDs, which are agreements to exchange the difference in value of aparticular asset such as a stock index or oil or gold contract, between the time at which a contract is opened and the time atwhich it is closed. Our CFD offerings currently include contracts for metals, fixed income, energy and stock indices, and for theyear ended December 31, 2013, CFD trading constituted approximately 17.4% of total trading volume. We will continue tointroduce new products as permitted by applicable laws and regulations. Due to U.S. regulatory requirements, we do not offerCFDs in the United States. CFD trading is offered through our Trading Station II and Meta Trader 4 ("MT4") products similarto our currency pairs. As our FX market makers cannot process agency model trades for CFDs, these products are not offeredon an agency basis. We stream the best bid and offer to customers, but we do not offset each trade automatically. However, weuse futures contracts to hedge CFD positions on a net basis.Spread BettingWe offer spread betting trading to our U.K. customers, which is where customers take a position against the value of anunderlying financial instrument moving either upwards or downwards in the market. Customers can make spread betting tradeson FX pairs, stock indices, gold, silver and oil. For the year ended December 31, 2013 spread betting constituted approximately1.9% of total trading volume.Equities and Equity OptionsWe offer our customers equity and equity option trading through FXCM Securities Limited (“FSL”). FSL offers customersoutside of the United States the ability to trade equities and options on U.K., continental Europe and U.S. markets. They areoffered using an FSL platform which integrates proprietary as well as third party software that connects to third party dataproviders, clearing firms and other market participants.Equities and equity options offered and sold through FSL, as a regulated broker dealer in the U.K., will, if traded in theprimary market, be offered and sold pursuant to Regulation S. Trading in equities and equity options for and with customers inthe secondary market will be carried out by FSL in compliance with applicable rules and regulations of the Financial ConductAuthority ("FCA") and other applicable law. These products do not currently represent a material source of revenue for us.Our Trading SystemsWe offer a number of trading systems, all of which are supported by our sophisticated, proprietary technologyinfrastructure. Our technology tracks the balances, positions, profits and losses and margin levels for all account holders in realtime. The back office system’s real time margin-watcher feature automatically closes out open positions if a customer’s accountis at risk of going into a negative balance as a result of a trading position losing value and reaching the minimum marginthreshold.Trading Station is our proprietary flagship technology platform. Trading Station combines power and functionality and isaccessible through a user-friendly interface. Trading Station is designed to serve the needs of our retail FX customers, but alsooffers advanced functionalities often used by professional money managers and our institutional customers. Trading Station is aWindows-based platform with a wide variety of customization options for users to choose from including a choice of 17languages. The platform provides an advanced chart offering called Marketscope which offers a wide array of customizationfeatures, technical analysis indicators, signal and alert functionality, as well as the ability to place trades directly from the chart.We grant many of our white labels a limited, non-exclusive, nontransferable, cost-free license to use Trading Station tofacilitate trading volume and increase trading fees and commissions.2
TABLE OF CONTENTSActive Trader Platform, also a proprietary technology platform, was built and designed for our higher volume customers.The platform is web-based, making it easily and quickly accessible by users without requiring a download. The platformfeatures most of the same capabilities as the Trading Station platform but also adds the ability to display up to 10 tiers ofmarket depth information. While Trading Station streams the best bid and best offer from our FX market makers to thecustomer, our Active Trader Platform displays not only the best bid and best offer but also the next nine bids and offers. Ourcustomers can use this information to determine where market liquidity is heavier and therefore which direction the moreimmediate moves may likely be. This market depth information is similar to Level II information displayed on the moreprofessionally geared equity trading systems, but is not common for retail FX. At present, we do not license rights or have anywhite label arrangements which include licenses to use our Active Trader Platform.Meta Trader 4 is a third-party platform built and maintained by MetaQuotes Software Corp, and we have licensed therights to offer it to our customer base. MT4 has a loyal and global user group and the platform caters towards customers withautomated trading systems that they have either developed themselves or have purchased from other developers. Our MT4platform utilizes all the features of our back office system and order execution logic that are provided to users of ourproprietary technology platforms. We have integrated MT4 into the same pricing engine as Trading Station, enabling its usersto get the same pricing and execution.FXCM Pro is our institutional level FX offering that permits banks, hedge funds, professional money managers and similarentities to trade anonymously on our Electronic Communication Network (ECN). FXCM Pro adds value by connectinginstitutional customers to our top tier FX market makers to gain access to preferred pricing. Customers using FXCM Pro canboth take and make prices on the platform. We earn revenue through markups on those prices and/or commissions charged tothe customer. We are currently using the FXCM Pro ECN, which is our in-house platform as well as the licensed FastMatch FXTechnology. These Platforms are designed to allow banks, hedge funds, professional money managers and similar entities totrade through FXCM Pro rather than third party platforms.FastMatch is a third party ECN for spot foreign exchange trading that offers customers access to large pools of diversifiedliquidity with the speed and transparency of equities trading and with a customer target of retail brokers, institutions, banks,hedge funds and proprietary trading firms. FastMatch allows clients to trade across an array of unique liquidity sub-pools eachgoverned by its own distinct rules of trading. FastMatch will also enable institutional clients to easily transact large sizes withminimum market impact.Other PlatformsOur Trading Station Web is similar to Trading Station but is web-based. The browser based platform allows customers toaccess their account from any computer without installing any additional programs. Trading Station Web is also easy to use andhas most of the customization options of Trading Station.Mirror Trader Platform, is a third party platform that we license, which allows customers to scan and review dozens ofpre-programmed and pre-filtered trading systems and 39 automated strategies. Customers can then select the systems thatmatch their trading and risk preferences and apply them to their trading account. Mirror Trader Platform is an ideal option forcustomers that follow general market trends but may not prefer to execute trades themselves. We offer the Mirror TraderPlatform to FXCM’s entire client base.Ninja Trader Platform (“Ninja Trader”) is an award-winning and leading trading software provider that is known for itshigh performance analytic and trade execution tools that maximize a trader’s efficiency in fast-moving markets. Ninja Traderalso offers free, daily trading webinars, an interactive product training video library, and an active online forum. Ninja Traderalso offers multiple simulation options.We also offer mobile platforms for multiple mobile devices, including Blackberry and the iPhone /iPad . Theseplatforms include a majority of the functionality found on the Trading Station and allow customers to log in and trade anywherein the world.White Label and Referring Broker OpportunitiesWe offer financial institutions the ability to offer retail FX trading services to its customers using our technology, our salesand support staff and/or our access to liquidity throu
trading platforms: Trading station, Trading Station Mobile, MetaTrader 4, Mirror Trader, Ninja Trader, and ZuluTrade 4.1 TRILLION in Retail Trading Volume for 2013 – up 13% Lucid 81.9 million in Revenues for 2013 2 trillion in Institutional Trading Volume for 2013 – up 72% FastMatch does on average 10 BILLION in trading volume a day Over
Annual Report 2020 compared to our 2019 Annual Report. The total carbon footprint for printing CIMB Annual Report 2020 was 11,588kgCO2e, compared to 14,987kgCO2e for our 2019 annual report. The carbon footprint for the 3 books of CIMB Annual Report 2020 is 14.485kgCO2e. We are committed to reducing the environmental impact of our annual report .
and Meeting Schedules: 6: Annual Report Workgroup Next Steps: Next steps for FY18 report development: 1. HITAC full committee reviews report . FY18 Annual Report Draft discussed: March 1, 2019. FY18 Annual Report Draft discussed: Winter/Spring 2019. FY18 Annual Report completed as needed:
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