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Foreign Exchange

Hotspot FX September volumes realign with market after dismal August

Hotspot FX, the multi-dealer platform owned by Knight Capital Group, posted a strong gain in average daily volumes (ADVs) in September, realigning the firm with its competitors after a dismal set of August figures.

Hotspot posted $25.8 billion in ADVs last month, or a 23.1% increase on the company’s ADVs from August, which plunged 19.2% to $21 billion compared with July after a computer glitch caused Knight Capital to lose at least $440 million. The company blamed the glitch and the resulting flash-crash in the wider market on faulty software, and a group of investors – which included TD Ameritrade and Blackstone – eventually reached a $400 million deal to bail out the equities broker and market maker in return for an ownership stake of about 70%.

Other investors included Getco and Stifel, Nicolaus & Co.

Rumours persisted in the market for some time that Knight Capital might seek to sell Hotspot FX – which it acquired for $77 million in 2006 – in an effort to shore up its capital base.

However, Hotspot FX managing director and business manager William Goodbody told EuromoneyFXNews in an interview on September 26 that the company was confident its users would “turn on” again to the platform after August’s performance.

Year-on-year, Hotspot FX’s September ADVs are down 24.3% compared with September 2011, when the company saw $34.1 billion transacted through its platform.

In total, Hotspot FX posted a total volume for September of $516.2 billion.

During the third quarter, the company saw $1.5 trillion pass through its trading facility.

 Hotspot FX volume trends compared to their competitors

 Source: Hotspot FX

Compared with its competitors, Hotspot FX beat out Icap-owned EBS and Reuters in September with a stronger month-on-month per cent increase. EBS saw its ADVs increase from August by 17%, and Reuters ADVs went up 16% month-on-month in September.

However, FXall and CME Group had a stronger September than Hotspot FX for ADVs, with month-on-month percent ADV increases of 25% and 41%, respectively.

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