INTL FCStone 2011 Annual Report Download - page 30

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INTL FCSTONE INC.Form10K16
PARTI
ITEM 1A Risk Factors
any reduction in trading activity could reduce liquidity which
in turn could further discourage existing and potential market
participants and thus accelerate any decline in the level of trading
activity in these markets.
Our net operating revenues may be impacted
by diminished market activity due to adverse
economic, political and market conditions
e amount of our revenues depends in part on the level of activity
in the securities, foreign exchange and commodities markets in
which we conduct business. e level of activity in these markets
is directly aff ected by numerous national and international factors
that are beyond our control, including:
•economic, political and market conditions;
•
the availability of short-term and long-term funding and capital;
•the level and volatility of interest rates;
•legislative and regulatory changes; and
•currency values and infl ation.
Any one or more of these factors may reduce the level of activity
in these markets, which could result in lower revenues from our
market-making and trading activities. Any reduction in revenues or
any loss resulting from these factors could have a material adverse
eff ect on our business, fi nancial condition and operating results.
Several of our product lines depend signifi cantly on
a limited group of customers
Based on management’s assessment of our business, we believe that
a small number of our customers account for a signifi cant portion
of our revenues in several of the product lines of our businesses.
ese product lines include our equities market-making, metals
trading and foreign exchange trading product lines. We are unable
to measure the level of this concentration because our dealing
activities do not permit us to quantify revenues generated by each
customer. We expect a signifi cant portion of the future demand
for each of our market-making and trading services to remain
concentrated within a limited number of customers. None of these
customers is obligated contractually to use our market-making or
trading services. Accordingly, these customers may direct their
trading activities to other market-makers or traders at any time.
e loss of or a signifi cant reduction in demand for our services
from any of these customers could have a material adverse eff ect
on our business, fi nancial condition and operating results.
We are dependent on our management team
Our future success depends, in large part, upon our management
team who possess extensive knowledge and management skills
with respect to securities, commodities and foreign exchange
businesses operated by the Company. e unexpected loss of
services of any of our executive offi cers could adversely aff ect our
ability to manage our business eff ectively or execute our business
strategy. Although these offi cers have employment contracts
with us, they are generally not required to remain with us for a
specifi ed period of time.
We depend on our ability to attract and retain key
personnel
Competition for key personnel and other highly qualified
management, sales, trading, compliance and technical personnel
is signifi cant. It is possible that we will be unable to retain our key
personnel and to attract, assimilate or retain other highly qualifi ed
personnel in the future. e loss of the services of any of our key
personnel or the inability to identify, hire, train and retain other
qualifi ed personnel in the future could have a material adverse
eff ect on our business, fi nancial condition and operating results.
From time to time, other companies in the fi nancial sector have
experienced losses of sales and trading professionals. e level of
competition to attract these professionals is intense. It is possible
that we will lose professionals due to increased competition or other
factors in the future. e loss of a sales and trading professional,
particularly a senior professional with broad industry expertise,
could have a material adverse eff ect on our business, fi nancial
condition and operating results.
Computer systems failures, capacity constraints
and breaches of security could increase our
operating costs and cause us to lose clients
We are heavily dependent on the capacity and reliability of
the computer and communications systems supporting our
operations, whether owned and operated internally or by third
parties. We receive and process a large portion of our trade orders
through electronic means, such as through public and private
communications networks. ese computer and communications
systems and networks are subject to performance degradation or
failure from any number of reasons, including loss of power, acts
of war or terrorism, human error, natural disasters, fi re, sabotage,
hardware or software malfunctions or defects, computer viruses,
intentional acts of vandalism, customer error or misuse, lack of
proper maintenance or monitoring and similar events. Our systems,
or those of our third party providers, may fail or operate slowly,
causing one or more of the following:
•unanticipated disruptions in service to our clients;
•slower response times;
•delays in our clients’ trade execution;
•failed settlement of trades;
•decreased client satisfaction with our services;
•
incomplete, untimely or inaccurate accounting, recording,
reporting or processing of trades;
•fi nancial losses;
•litigation or other client claims; and
•regulatory sanctions.