Our retail customers consist primarily of self-directed traders, who execute
trades on their own behalf. A small percentage of our customers have engaged
an intermediary to make trading decisions on their behalf.
Our typical self-directed customer is generally comfortable making trading decisions
and is specifically interested in trading leveraged products, which generally
have a higher risk/reward profile.
The intermediaries engaged by our managed account customers, which we refer
to as authorized traders, include professional money managers, which trade a
significant amount of aggregated customer funds, and individuals that trade
for a small number of customer accounts.
In connection with our retail business, we look to acquire new customers as
cost-efficiently as possible, primarily through online marketing efforts such
as advertising on third-party websites, search engine marketing and email marketing.
Our experienced in-house marketing team creates highly targeted online campaigns
tailored to experienced traders, as well as marketing programs and materials
designed to support and educate novice traders. We use sophisticated tracking
and measurement techniques to monitor the results of individual campaigns and
continually work to optimize our overall marketing results.
Our principal lead-generation tool is to offer prospective customers access
to free registered practice trading accounts for a 30-day trial period. From
a prospective customer’s point of view, we believe the registered practice
trading account serves two important functions. First, it allows the prospective
customer to evaluate our trading platform, tools and services. Second, for less
experienced traders, it serves as an educational tool, providing the prospective
customers with the opportunity to try trading in a risk-free environment, without
committing any capital. During this trial period, our customer service team
is available to assist and educate the prospective customers.
We also actively forge partnerships with introducing brokers in order to expand
our customer base. We work with a variety of different types of introducing
brokers, ranging from small, specialized firms that specifically identify and
solicit customers interested in forex and CFD trading, to larger, more established
financial services firms. Introducing brokers direct customers to us in return
for either a commission on each referred customer’s trading volume or
a share of net revenue generated by each referred customer’s trading activity.
Our institutional sales and trading business serves a broad range of participants
across several asset classes, allowing clients to interact with the market based
on their specific needs and preferences. As a result, we are able to attract
a base of clients with diverse investment styles and strategies. Our institutional
sales and trading business includes our agency voice brokers who assist clients
with complex liquidity sourcing and trade executions, as well as our swap execution
facility, or SEF, which provides an electronic venue for trading FX non-deliverable
forwards.
Nearly all of our revenue from institutional sales and trading consists of commissions
derived from transaction execution services for institutional clients, conducted
on an agency basis, as well as commission-equivalents generated on riskless
principal transactions. Over the past several years we have built up this business
primarily through a focus on client service and an expansion of our sales and
trading team.
We have a direct sales team that is dedicated to building relationships with
potential institutional customers and expanding our institutional business.
Since its inception in 2010, our institutional business has quickly expanded
to include customers throughout the United States, Europe and Asia.
As with our other segments, we seek to acquire customers as cost-efficiently
as possible. Sales leads are generated through seminars, online advertising
and other media.
Our futures segment customers are sourced directly through dedicated sales
staffs at GAIN Capital Group LLC, GAA, and TT. These sales teams focus on a
variety of sectors and provide differentiated services to our customers.
Additionally, our futures segment is introduced to customers indirectly through
a network of introducing brokers, whose customers deposit funds with Gain Capital
Group LLC.
