DEAR FELLOW SHAREHOLDER,
In 2012 FXCM completed its second year as a public company. and futures markets, headquartered in the U.K. Using a full year of Despite some of the lowest currency volatility in recent history, Lucid’s results, institutional revenue would have been 25% of our with annual averages down 22% from the year prior, our scale total institutional revenue. Adding also to our institutional growth, and diverse revenue base enabled us to grow revenues and FXCM announced in 2012 the launch of FastMatch in partnership active accounts while making solid improvements in client equity with Credit Suisse Group AG. FastMatch is an Electronic Commu- and cash from operations. nication Network (ECN) for foreign exchange trading, offering its customers access to large pools of diversified liquidity at unparal- The Recap: leled speed with complete transparency. FastMatch is based on Since FXCM’s inception, we have pursued a strategy to grow the matching technology developed and proven in the equities market business to reap the benefits of scale and the protection of and brings these capabilities for the first time to the forex market. diversified sources of revenue. The virtues of this strategy were particularly evident in 2012. Some of our achievements in 2012 The Outlook: include successfully expanding our distribution by adding two Looking forward, we continue to be very optimistic about 2013. significant white label partners E*TRADE and Barclays; completing We believe the strategy that served us well through the historic integration of three Japanese brokers to create one of the top 10 volatility lows of 2012 will continue to reap benefits in the coming FX brokers by volume in Japan; and adding scale and diversity to year, whether market conditions change or remain the same. our market segments by purchasing Lucid Markets and launching We will continue to look for opportunities to expand our scale, via FastMatch. Additionally FXCM continued to ramp up its product organic growth, strategic acquisitions and new white label partnerships. offerings with enhancements to the FXCM flagship platform, our Regulatory changes have been a constant in the market for the mobile and tablet platforms, as well as launching an FXCM past four years. We expect this will continue in 2013. While they exclusive app store geared toward the fast growing automated can present challenges in individual geographies or segments, we trading sector. continue to believe they present us with more opportunities than FXCM’s white label offering provides financial institutions the obstacles. There are a number of regulations, some already ability to offer retail FX trading services to their customers using enacted, some proposed and some potential which will have an our technology, our sales and support staff and/or our access to asymmetric impact on other asset classes and other FX brokers liquidity. In 2012, our white label partners and referring brokers presenting opportunities for FX in general and FXCM in particular. generated 46% of FXCM’s retail trading volume. In addition to Summing things up, we are very optimistic about our strategy, our successfully adding E*TRADE in the U.S. and Barclay’s in the current platform and what lies ahead in 2013. U.K., we added important partners across Europe and Asia. We also have a wide network of referring brokers, which are third To FXCM’s customers and partners, we say thank you for your parties that advertise and sell our services in exchange for continued support. To our employees, we thank you for your performance-based compensation. These partnerships allow us to continued dedication and valued contribution to our business. expand into new markets around the world. We intend to continue We also would like to thank our shareholders for continuing to to build upon the success of these white label partnerships and believe in our business model. referring broker networks to create new partnership opportunities around the world. Sincerely,
During 2012, we further diversified our sources of revenue with institutional revenues climbing to 15% from just 7% in 2011, largely Drew Niv due to our acquisition of Lucid Markets mid-year. On June 18, Chairman and Chief Executive 2012 we acquired 50.1% controlling interest in Lucid, an electronic market maker and trader in the institutional foreign exchange spot FINANCIAL AND PERFORMANCE HIGHLIGHTS 2012
FXCM Inc. Statement of Financial Condition Dec. 31, 2012
ASSETS Current assets Cash and cash equivalents ...... $272.3 Cash and cash equivalents, held for customers ...... 1,190.8 Total current assets ...... 1,493.2 Deferred tax assets ...... 117.2 Office, communication, and computer equipment, net ...... 50.3 Other Intangible assets and goodwill, net ...... 383.4 Other assets ...... 21.0 TOTAL ASSETS ...... $2,065.1
Growth in Revenues, Equity, Volumes and Clients
Revenues (1) EBITDA (1) Client Equity Cash from Ops Active Accounts $500 $120 $1.4 $120 200 $100 $112 $113 $1.2 $100 $400 $417 $1.2 171 $412 $102 150 163 $1.0 $1.0 $80 $80 $84 $300 $0.8 $60 $60 100 $200 $0.6 $40 $40 $0.4 50 $100 $20 $0.2 $20 $- $- $- $- - 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012
(1) On an adjusted Pro Forma basis. Adjusted Pro Forma revenues and EBITDA are non-GAAP financial measures that exclude certain extraordinary items; reconciliations of these measures to the most directly comparable GAAP measures are available in the appendix to this presentation
FXCM ADV and Customer Equity vs. CVIX(1)
Retail $ / Million
18.0 $1,600 $120 Customer Equity CVIX 3m avg 16.0 $1,400 $100 $98 $99 14.0 $95 $93 $94 $90 $1,200 $80 12.0 $1,000 $60 10.0 $800 8.0 $40 $600 6.0 $20 $400 4.0 $ - 2.0 $200 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
0.0 $0 Volume by Region ($ Billion) Jul-11 Jul-12 Jul-10 Jan-11 Jan-12 Jan-10 Mar-11 Nov-11 Sep-11 Mar-12 Mar-10 Nov-12 Nov-10 Sep-12 Sep-10 May-11 May-12 May-10 1,200
1,000 141 131 128 124 116 800 112 95 106 89 101 92 86 600 316 271 272 275 260 283
400 461 459 490 387 421 401 200
- Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012
Asia EMEA US ROW FXCM FAST FACTS
FXCM Inc. (NYSE: FXCM) is a global, online provider of foreign Why FXCM is Different: exchange (forex) trading and related services to retail and Differentiated agency model that aligns our interests with our institutional customers world-wide. customers’ interests, produces a better customer trading Founded in 1999 and headquartered in New York, NY, FXCM experience, generates more stable revenues, and exposes has operating subsidiaries regulated in a number of us to less market, regulatory, and reputational risk. jurisdictions, including the United States, the United Kingdom, FXCM offers customers access to over-the-counter forex Hong Kong, Japan, and Australia. We also maintain offices in markets through a proprietary technology platform
Italy, France, Germany, and Greece. FXCM’s platform presents its forex customers with the best price quotations on up to 58 currency pairs from up to 38 liquidity providers The Platform: Expanded presence in Europe, Australia, and Asia—large Our retail trading platform, FXCM Trading Station, has become markets for retail forex trading the source for accurate pricing and world class services. Our Best Bid/Offer Engine selects the best buy price and the For FXCM, the ability for a trader to trust a broker is vital, and best sell price, from our pool of market makers, creating the at the heart of our offering is No Dealing Desk forex execution. best spread available Clients benefit from FXCM's large network of forex liquidity FXCM automatically adds a markup to either side, typically providers, enabling FXCM to offer competitive spreads on major about 1 pip on major currency pairs. This markup is how currency pairs. Clients have the advantage of mobile and tablet FXCM makes money, not the client’s profit or loss on their trade trading, one-click order execution, and trading from real-time charts. All of this is delivered via an easy-to-use interface, making it a great solution for both new and experienced traders. All FXCM platforms incorporates all the major functions of the FXCM flagship desktop platform, and includes live executable Daily FOREX Market News and Analysis exchange rates for over 58 currency pairs, chart indicators, interactive charts, real-time news feeds and articles from DailyFX, FXCM’s free news and research website, delivers DailyFX. up-to-date analysis of the fundamental and technical influences driving the currency and commodity markets.
Free Currency Rates Mobile Updates Free Live News Feed Live Trading Events . UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-K