INTL FCStone 2014 Annual Report Download - page 32

INTL FCSTONE INC.  Form 10K16
PART I
ITEM 1A Risk Factors
•perceived stability of commodities and financial markets;
•the level and volatility of interest rates and inflation; and
•financial strength of market participants.
Any one or more of these factors may reduce price volatility or
price levels in the markets for commodities trading, which in
turn could reduce trading activity in those markets. Moreover,
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 affected 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 inflation.
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 effect on our business, financial condition and
operating results.
We depend 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 we operate. e unexpected loss of services of any
of our executive officers could adversely affect our ability to
manage our business effectively or execute our business strategy.
Although some of these officers have employment contracts
with us, they are generally not required to remain with us for a
specified 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 significant. It is possible that we will be unable to retain our
key personnel and to attract, assimilate or retain other highly
qualified 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 qualified personnel in the future could have a
material adverse effect on our business, financial condition and
operating results.
From time to time, other companies in the financial 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 effect on our business, financial
condition and operating results.
In the event of employee misconduct or error,
our business may be harmed.
ere have been a number of highly publicized cases involving
fraud or other misconduct by employees of financial services firms
in recent years. Employee misconduct or error could subject us to
legal liability, financial losses and regulatory sanctions and could
seriously harm our reputation and negatively affect our business.
Misconduct by employees could include engaging in improper or
unauthorized transactions or activities, failing to properly supervise
other employees or improperly using confidential information.
Employee errors, including mistakes in executing, recording or
processing transactions for customers, could cause us to enter into
transactions that clients may disavow and refuse to settle, which
could expose us to the risk of material losses even if the errors are
detected and the transactions are unwound or reversed. If our
clients are not able to settle their transactions on a timely basis, the
time in which employee errors are detected may be increased and
our risk of material loss could be increased. e risk of employee
error or miscommunication may be greater for products that are
new or have non-standardized terms. It is not always possible to
deter employee misconduct or error, and the precautions we take
to detect and prevent this activity may not be effective in all cases.
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, fire, 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,