ITI Capital exits retail business following takeover of SVS

abdelaziz Fathi

ITI Capital Limited has released its annual report and year-end financial statements for the twelve-month period ending December 31, 2021.

ITI Capital

The latest results on UK Companies House showed a notable drop in turnover in conjunction with a higher financial loss for the reported fiscal period.

For 2021, ITI Capital posted a total of £3.3 million worth of revenues, which represents a drop of 43 percent year-over-year. That compares to £5.8 million the company reported in 2020.

Operating losses were pointed higher during the FY 2021. Looking at the group’s final numbers for the financial year, which factored out interest receivable and other income, ITI Capital reported ‎losses of £3.5 million‎, worse than the £2.1 million it lost a year earlier.

Other business highlights show that ITI Capital acknowledges that the brokerage market continues to be highly competitive. As a result, the revenue margins and fees have remained under pressure.

Indeed, the retail FX market in Europe is becoming relatively challenging for the brokers, which is why many brokers are looking into new opportunities in the wholesale liquidity and clearing market.

Elsewhere, ITI Capital attributes its poor financial performance to acquiring the client book of SVS Securities. The vast majority of the collapsed broker’s investors have become clients of ITI since June 2021, and they were provided with access to their money and assets again.

Although ITI Capital tried to lure the newcomers into staying, it has come under regulatory restrictions arising from its acquisition of SVS’ book of business. Specifically, the move added 21,000 new customers and £250 million worth of client assets. However, the company ran into technical difficulties which led to dissatisfied customers complaining to the FCA.

To resolve the issue, ITI Capital said it voluntarily agreed to “certain restrictions until such time that these technical issues related to the clients of the distressed broker had been addressed.” These restrictions included not to onboard new clients as well as halting clients’ trading activities with the company “under the CASS regime.”

The saga with SVS’ clients has prompted ITI Capital to cease its services to retail investors in the UK. The FCA-regulated broker already sent emails to clients explaining that as of December 22 it will provide its services exclusively for professional clients and institutional traders.

The statement further reads:

“Whilst we are now well advanced in addressing these issues, the Board took a decision that the Company would exit the retail segment of its business and the provision of all services to retail clients for all products and markets. Following the SVS acquisition and all the ensuing difficulties that arose from or because of it, the Board felt that the Company would be better positioned in the future to focus on developing its business for professional and institutional client services only. We have commenced the exit for the retail business in June 2022 and we expect to wind down the retail side of the business by 21 December 2022, to ensure the best possible outcome is secured for all clients.”

In light of internal business decisions to focus on other markets and grow their B2B operations, many forex brokers, like Exness, decided to close the retail business in EU/EEA, including the UK.

One of the reasons stated for the exclusive focus on the institutional business is the recent changes in the regulatory environment. Indeed, the retail FX market in Europe is becoming relatively challenging, which is why many brokers are looking into new opportunities in the wholesale Liquidity and clearing market.

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