There are three major revenue sources - spreads, fees and market making.
Transactional spread:
XTB executes thousands of orders per day, the transactions concluded by the clients usually reduce themselves (offset). Due to this fact the company’s market risk exposure is significantly or totally decreased. For example, if one client bought 1 EURUSD lot and the other sold 1 EURUSD lot, then there is no market risk exposure at the XTB side. In this case the XTB’s revenue is transactional spread - the difference between bid and ask prices. The transactional spread was more than 60% revenues between 2018 and 2019, and 54% revenues in 2020, so it’s the XTB’s main revenue source.
Transactional fees:
Transactional fees and swap points are another XTB’s revenue source. These costs come from the difference between interest rates or holding the position. XTB estimates this revenue of 10-15% total amount per year.
Market making:
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The other part of XTB’s revenues is actual market making, which means market animating and being the other party of transactions. It generates approximately 20-30% of revenues. Obviously the amount changes depending on the subject period (due to short term volatility), but in the long term it aims to zero, while transactional spread revenues increase. Below table is a part of a consolidated annual report and presents percentage share of each XTB revenues category in years 2018-2023, being an effect of gross financial instruments operations.
The above is only applicable to the Customers who have their account opened with XTB S.A.
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