The Acquisition of TradeStation Group
The acquisition of TradeStation Group, Inc. has been a major progress in moving forward with the Global Vision in the first quarter of this fiscal year.
With this acquisition, the Monex Group has attained top-ranked technology, brand, and development resource that we can apply globally.
In China, this powerful brand and technology will be a key driver in launching our business there.
In Japan, TradeStation’s technology can attract active traders that Monex has not necessarily targeted in the past.
In the United States, we will continue to expand our business by attracting broader range of active traders as well as rule-based traders , and improve profitability in the FX business.
At the same time, we will reduce costs by developing systems in-house and creating a universal platform to gain competitive advantage.
Post Merger Strategies
Since the merger, our international team of experts has been analyzing and developing plans to create positive synergies within the group to accelerate the Global Vision. Let’s take a look at the current state of the Monex Group and projections towards the future.
State of the Monex Group post merger
The combined revenues of all businesses and regions are shown below. The current breakdown of revenue by region is 68:31:2, but we plan to make this ratio 40:35:25 in 3 to 4 years.
The combined costs by account and regions, and personnel distribution are shown below. In Japan, system-related costs are prominent since system development is outsourced. On the other hand, in the United States, there is weight on personnel costs and resource since systems are developed in-house.
The current breakdown and future projection of revenue by region and product line are shown below. We are aiming to increase revenue on a global basis by 50% in the next 4 years. To achieve this, we are taking short to long term measures that will create revenue drivers in our main business regions, Japan, the U.S., and China. For example, in Japan, we will be enhancing our trading tools with TradeStation’s technology to target active traders. In the U.S., we will be consolidating FX coverage trading of TradeStation into Monex’s existing flow. In China, we will be launching BtoBtoC trading platform business, and starting the FX business in Hong Kong.
IBelow is the current cost structure and future projection by account and region. Our major goal is to cut fixed costs by 20% in 4 years. To do so, we will be developing systems in-house utilizing TradeStation’s technology development resources, and creating a universal platform capable of use in all three regions for further efficiency. Other measures will also be taken to eliminate redundancies and leverage synergies within the group.
As we have seen, we are taking concrete measures up to speed with flexibility. Please note that projections of revenue and cost we have mentioned above are based on current conditions and may be susceptible to change.
For instance, it may seem that planned revenue expansion in China is small compared to other regions, however, this is only a tentative figure based on current business plans. We are also planning further business expansion in Japan and the U.S., and are aiming for a more aggressive revenue expansion in the future.
Short-term reduction in costs is also targeted at 8%, however, if we are able to increase revenue by 50% in four years at the same time, we can improve our operating margin to 40%. Once we accomplish this short-term goal, we will further accelerate reducing fixed costs by 20%, which is our ultimate goal, by building a universal platform to create next-generation systems.
Since the acquisition of TradeStation, we have been taking steady steps to realize the Global Vision. It is not an easy road, however, slowly but surely, we are beginning to see change. We will provide consistent updates to share our progress going forward, and we thank you for your continuous support and understanding.