Orc Group, a provider of trading technology and services, has become the second firm in a matter of days to announce substantial losses for its broking subsidiary on the back of dwindling equity volumes.
According to its interim report for the first six months of 2011, Orc's brokerage services, which include Neonet, the Swedish agency broker it acquired in April 2010, suffered losses of SEK 12 million (US$1.84 million) during the second quarter of this year. This took the total amount of brokerage-related losses at Orc Group to SEK 16 million (US$2.54 million) for the first half of this year.
“Neonet has been negatively affected by declining volumes and more aggressive competition,” said Orc Group's CEO, Thomas Bill. “Although we have succeeded in winning new customers, sales have continued to fall and led to an increased loss for the period. We are taking this situation very seriously and the management is working with several different activities to address these problems.”
Bill added that the largest deal for the company during the last quarter came with a Nordic customer that used a combination of Orc and Neonet technology.
“The key factors for the second half of 2011 are the level of churn for Orc and development of the trading volume for Neonet,” added Bill. “Both of these factors are highly dependent on whether uncertainty continues in the global financial markets and how profitability develops among the customers.”
Total revenue at Orc Group for the first six months of 2011 was SEK 477.9 million (US$73.49 million), representing a revenue growth of 5% compared to the previous period.
Falling equity turnover has also impacted agency brokerage ITG, which announced a raft of job cuts yesterday to its US and European technical development business.
June was the second lowest month for equity trading volume in Europe this year, with the value of equities traded across the region reaching €799 billion (US$1.13 trillion) against a monthly average of €846.68 billion (US$1.199 trillion).