OANDA Europe Limited, a Financial Conduct Authority (FCA) regulated forex brokers recently published its annual financial results for the year 2019. The firm shows a 20% decrease in revenue during the period. The firm experienced a net loss of $3.55 million as compared to a gain of £823,962 in the previous year.
Revenue loss due to ESMA
The firm said in its most recent Companies House filing that its total turnover for the year was over £11.83 million in 2019, compared to £14.8 million in the previous year. The firm said that the decline was revenue occurred because of the long-term impact of ESMA leverage and marketing regulations.
“Following the August 2018 introduction of ESMA’s leverage guidelines, many retail brokers in Europe experienced a 20-40 percent revenue reduction over the following year, which clearly demonstrates the industry impact of the new restrictions.”
The firms were only related to OANDA Europe. The OANDA group has multiple entities running its global businesses. After Brexit, its European business is being managed by its Malta-based subsidiary.
Marketing expenses reason for the loss
The administrative expenses for the broker increased during the period to £15.26 million, compared to just £13.91 million. The firm said that these expenses had to make despite lower revenue because of rising in its marketing aggressiveness. It noted that the firm made several significant investments in its digital marketing and product initiatives, which resulted in a rise in expenses. The firm considers these expenses critical for their ongoing success, as it would help them in providing competitive pricing to their users, bring new advancements to the platforms, and introduce new trading instruments.
The filing also details the firm’s growing efforts to expand its client base and implement other improvements to its platform. It is expecting the results from the expenses to show in 2020. A spokesperson for the firm said that the UK unit has outperformed its targets in 2020. However, the exact figures for the year are not available yet.