In an updated Securities and Exchange (SEC) filing, the US registered and listed (NYSE:GCAP) Forex broker, GAIN Capital has reported significant growth in client trading activity, trading volumes and revenues in the first quarter of 2020 following the announcement that it would sell all of its shares to INTL FCStone Inc. (NASDAQ:INTL).
Essentially, GAIN Capital stated that following the day of the signing of the merger agreement) February 27th and up until the end of the quarter on March 31st, the broker experienced market volatility which increased average daily trading volume (“ADV”) and retail revenue per million (“RPM”). Specifically, average daily trading volume (“ADV”) during the post-signing Q1 period was $17.8 billion, a 123% increase from $8.0 billion, the ADV during the pre-signing Q1 period, and a 131% increase from $7.7 billion, the ADV during the first quarter of 2019.
Similarly, the heightened volatility resulted in a significant increase in retail revenue per million (“RPM”) during the post-signing Q1 period, which increased to an RPM of approximately $281 during the post-signing Q1 period, an increase of 71% and 462% from an RPM of $164 and $50 in the pre-signing Q1 period and the first quarter of 2019, respectively.
While the revenue and trading volume figures are intriguing in the short-term, the Board of Directors of the broker continues to recommend that the merger agreement be adopted by the stockholders of GAIN, by a vote of seven to one. The GAIN board says it will continue to review its rights under the merger agreement, including its rights relating to the determination of the existence of a “company intervening event” and changing its recommendation to the GAIN stockholders up to the time of the special meeting. As such, the merger transaction is still pending, but may change as the effects of Covid-19 pandemic continue to influence the financial markets.