Equiti Capital UK Profit Halved as Costs Rise

Equiti Capital UK Limited has reported a 52% fall in profit for 2024, despite achieving modest growth in revenue. The London-based broker, a subsidiary of Equiti Group, specializes in institutional CFD trading and execution-only brokerage services.

Net trading revenue climbed to $32.2 million, a 4% increase from the previous year. The gain was credited to higher trading volumes and an expansion in product offerings. However, expenses grew at a much faster pace, eroding bottom-line performance.

Operating costs rose to $31.8 million, up 10% year-on-year. The company said investments in quantitative research tools and compliance systems accounted for a large portion of the increase. It described these as necessary for meeting regulatory requirements and supporting its strategy of tailoring pricing and liquidity to client needs.

The rise in legal and professional fees was especially notable. These expenses surged more than fourfold, reaching $4.1 million compared to under $1 million in 2023. Intercompany charges also increased, up 42% to $6.9 million.

Equiti Capital ended the year with profit after tax of $530,000, a sharp drop from $1.1 million in the previous year. Still, its balance sheet showed resilience, with net assets of $39.4 million and cash holdings of $80.6 million. Derivative financial assets increased to $45.5 million, partially offsetting a decline in total assets from $171.6 million to $151.1 million.

The firm distributed a $7 million dividend after the close of the financial year, a decision that highlights confidence in its financial stability despite weaker earnings.

Regulatory compliance remained a central theme. The company, regulated by the UK's Financial Conduct Authority, said fees related to supervision remained high at $1.7 million. It emphasized its commitment to "delivering fair customer outcomes" and maintaining strong execution standards.

In a separate development, parent company Equiti Group has been adjusting its leadership structure. The promotion of Sartaj Singh to Chief Technology Officer followed his work revamping the group's trading platforms and infrastructure since late 2023. The changes underscore the group's focus on technology upgrades and strengthening global operations.