INTL FCStone 2014 Annual Report Download - page 36

INTL FCSTONE INC.  Form 10K20
PART I
ITEM 1A Risk Factors
We also derive a significant portion of our revenues from
commodities risk management services. The commodity
risk management industry is very competitive and we expect
competition to continue to intensify in the future. Our primary
competitors in this industry include both large, diversified
financial institutions and commodity-oriented businesses, smaller
firms that focus on specific products or regional markets and
independent FCMs.
A number of our competitors have significantly greater financial,
technical, marketing and other resources than we have. Some
of them may:
•
offer alternative forms of financial intermediation as a result
of superior technology and greater availability of information;
•offer a wider range of services and products than we offer;
•be larger and better capitalized;
•have greater name recognition; and
•have more extensive customer bases.
ese competitors may be able to respond more quickly to new
or evolving opportunities and customer requirements. ey may
also be able to undertake more extensive promotional activities
and offer more attractive terms to customers. Recent advances
in computing and communications technology are substantially
changing the means by which market-making services are delivered,
including more direct access on-line to a wide variety of services
and information. is has created demand for more sophisticated
levels of customer service. Providing these services may entail
considerable cost without an offsetting increase in revenues. In
addition, current and potential competitors have established
or may establish cooperative relationships or may consolidate
to enhance their services and products. New competitors or
alliances among competitors may emerge and they may acquire
significant market share.
We cannot assure you that we will be able to compete effectively
with current or future competitors or that the competitive
pressures we face will not have an adverse effect on our business,
financial condition and operating results.
Our business could be adversely affected if we
are unable to retain our existing customers or
attract new customers.
e success of our business depends, in part, on our ability to
maintain and increase our customer base. Customers in our
market are sensitive to, among other things, the costs of using
our services, the quality of the services we offer, the speed and
reliability of order execution and the breadth of our service
offerings and the products and markets to which we offer access.
We may not be able to continue to offer the pricing, service,
speed and reliability of order execution or the service, product
and market breadth that customers desire. In addition, once
our risk management consulting customers have become better
educated with regard to sources of risk and the tools available
to facilitate the management of this risk and we have provided
them with recommended hedging strategies, they may no longer
continue paying monthly fees for these services. Furthermore, our
existing customers, including IRMP customers, are not generally
obligated to use our services and can switch providers of clearing
and execution services or decrease their trading activity conducted
through us at any time. As a result, we may fail to retain existing
customers or be unable to attract new customers. Our failure to
maintain or attract customers could have an adverse effect on
our business, financial condition and operating results.
We rely on relationships with introducing
brokers for obtaining some of our customers.
e failure to maintain these relationships could adversely affect
our business. We have relationships with introducing brokers
who assist us in establishing new customer relationships and
provide marketing and customer service functions for some of
our customers. ese introducing brokers receive compensation
for introducing customers to us. Many of our relationships with
introducing brokers are non-exclusive or may be canceled on
relatively short notice. In addition, our introducing brokers
have no obligation to provide new customer relationships or
minimum levels of transaction volume. Our failure to maintain
these relationships with these introducing brokers or the failure
of these introducing brokers to establish and maintain customer
relationships would result in a loss of revenues, which could
adversely affect our business.
Certain provisions of Delaware law and our
charter may adversely affect the rights of holders
of our common stock and make a takeover of us
more difficult.
We are organized under the laws of the State of Delaware. Certain
provisions of Delaware law may have the effect of delaying or
preventing a change in control. In addition, certain provisions of
our certificate of incorporation may have anti-takeover effects and
may delay, defer or prevent a takeover attempt that a stockholder
might consider in its best interest. Our certificate of incorporation
authorizes the board to determine the terms of our unissued series
of preferred stock and to fix the number of shares of any series of
preferred stock without any vote or action by our stockholders.
As a result, the board can authorize and issue shares of preferred
stock with voting or conversion rights that could adversely affect
the voting or other rights of holders of our common stock. In
addition, the issuance of preferred stock may have the effect of
delaying or preventing a change of control, because the rights
given to the holders of a series of preferred stock may prohibit a
merger, reorganization, sale, liquidation or other extraordinary
corporate transaction.