Good morning everyone. First of all, I would like to say it is an honor to be nominated for election as Executive Director and CEO of Flow Traders Ltd at a special general meeting later today. I've met over the past two months many talented and ambitious people and I'm impressed by the achievements they have made over the past two decades establishing Flow Traders Ltd as one of the leading market makers. I'm excited about the company's future growth and eager to contribute my experience and expertise to help take Flow Traders Ltd to the next level. Moving to the Trading Update, in the third quarter of 2025, the trading environment was less active. Volatility continued to drop following the slowdown in May and June, impacting all asset classes and regions.
This resulted in a decrease of our net trading income to $78.3 million, lower compared to the second quarter and when compared to the same period a year ago. Both periods were marked by a significant spike of volatility. Flow Traders Ltd ETP value traded increased by 17% in the quarter compared to last year. Total income came in at $80.5 million for the quarter, which included a $2.1 million gain in other income. Our fixed operating expense this quarter came in 14% higher than the same quarter last year and 3% higher than the second quarter of this year. This increase is in line with our plan and we continue to invest in having talent in targeted areas and scale our technology. Additionally, this quarter we had $0.3 million in impairments on intangible assets tied to our digital assets trading book.
Given our relatively fixed cost base and high operational leverage, we generated an EBITDA of $19.4 million in the quarter. Year to date, EBITDA came in at $149.8 million. Net profit for the quarter came in at $10.9 million with a basic and diluted EPS of $0.25. Year to date, net profit came in at $98.5 million with basic EPS of $2.26. Finally, earlier today we announced in a separate press release that we secured two new credit facilities. I will now hand it over to Alex for the next few slides.
Thanks, Thomas. Good morning all. As indicated at the top left of this slide, market ETP value traded increased by 47% year-over-year and by 5% compared to the previous quarter. Implied volatility measured by VIX decreased by 7% from last year and by 32% from last quarter. Furthermore, total ETP assets under management grew by 7% this quarter and 21% year-over-year. We're approaching EUR 16 trillion AUM, driven by ongoing fund inflows and overall market strength. ETP velocity slightly declined from last quarter but remained higher than last year, driven mostly by the U.S. and Asia. In summary, the long-term industry trend within the ETP universe continues to be strong. I will now move on to the dynamics within the fixed income and crypto markets and hand it over to Marc.
Thanks Alex. Over to the fixed income and crypto markets. Credit market trading volumes rose compared to last year, but fell from the previous quarter. Volatility, as measured by the MOVE index, significantly decreased both yearly and quarterly. Trading volumes in digital assets increased both compared to last year and last quarter, with cryptocurrency prices almost doubling. Global crypto ETP turnover more than doubled compared to last year and the second quarter. However, bitcoin volatility saw a significant decline both annually and quarterly. Let's move to the next slide.
Here we present an overview of regional performance for the quarter. As mentioned earlier, market ETP value traded increased substantially compared to the same period last year. This was largely driven by the Americas and Asia. Quarter -on- quarter, it saw a modest increase driven fully by China. Let's start with Europe. We kept our position as a leading ETP liquidity provider with over 25% market share. The quarter led to lower than expected results, resulting in a lower contribution from one of our key profit centers. Now to Americas. Volatility continued to decline over the summer months following a volatile start of the year. As a result, our third quarter results came in below expectations versus last year given the volume levels.
Moving to Asia, the results reflect a more muted quarter compared to last year, largely because the BOJ event in August and anticipation of China stimulus had boosted activity in 2024. Most of the volume increase in Asia came from onshore ETF trading in China. Our participation there is still limited due to capital constraints. The APEC region remains a key focus area for the firm. On digital assets, increased volumes and prices led to significant increases in crypto ETP value traded. However, this was offset by lower volatility both year -on -year and quarter -on -quarter. Therefore, performance levels were relatively comparable to last year. We are focusing on expanding our partnerships to advance the tokenization of real world assets and to deepen liquidity across key crypto platforms. Moving on to the next slide, now let's look at expenses.
Fixed operating expenses in the quarter increased by 14% year -on- year and 3% quarter -on -quarter. This was mostly due to increased employee and other expenses and was in line with our plan. We delivered a 24% EBITDA margin this quarter, and this reflects our flexible compensation philosophy which aligns us with our shareholders. Moving on, at the end of the quarter, we had 622 full time employees. This is up from 607 at the end of the second quarter. Looking ahead for the year, we expect our fixed operating expenses to be between EUR 200 million and EUR 205 million. The main drivers are investments in technology and hiring experts in key growth areas. We also expect some savings from better operational efficiency. I will now hand it over to Thomas for the next slide.
Thank you, Alex and Marc. Here we are looking at the progression of our trading capital base, the return on trading capital, and respectively, the growth of shareholders' equity. At the end of the third quarter, we have increased our trading capital 36%. Since the announcement of our trading capital expansion plan in July 2024, we have overall generated a 68% return on average trading capital over 12 months. Despite such a rapid increase, this does validate our decision to retain additional earnings for reinvestment into trading capital. Our shareholders' equity also continued to grow, increasing by EUR 13 million to EUR 830 million at the end of the quarter. Due to the more quiet market condition during this quarter, our return on average trading capital slightly decreased to 68% and our return on equity decreased to 22%.
In addition, and as mentioned earlier, we have just secured a $200 million private credit facility and a $75 million revolver from Benefit Street Partners and Stone Point Credit, two leading private asset managers. Altogether, these different initiatives increase our trading capital by more than 70%. This will allow us to increase our capacity to provide more liquidity, be more active as a market maker, and support our growth. We are also confident that we will continue to generate over 50% return on trading capital over the course of our business, given our existing trading strategies and capabilities. I will now hand the call back to Eric.
Thanks, Thomas. This concludes the formal part of our presentation. We would now like to open up. The floor for any questions you may have. Operator.
Ladies and gentlemen, we are now ready to take your questions. Just as a reminder, if you wish to ask a question, please press pound five on your telephone keypad. You can also send written questions underneath the player. Our first question comes from Julian Dobrovolshi from ABN AMRO ODDO BHF. Please go ahead.
Good morning gentlemen, and thanks for taking my questions. Maybe to start with Thomas, warm welcome from my side and good luck at Flow Traders. Before diving into the numbers, can you kind of share with us what appealed to you at Flow Traders. In the. First place when you took the CEO role? If you can speak about the company's strengths from your point of view now that you're kind of in. The job for a couple of weeks. If you already identified a couple of pockets of improvement in the business, just curious, how do you broadly look at the company and then have a couple of follow ups on the corporate performance?
Thank you Julian and thank you for the welcome. Overall, I will be going to use that call to thank all our employees and partners for the very warm welcome and support I've received. Over the past few weeks. I think Flow Traders has a unique USP, which is that we are an incredibly talented and knowledgeable company that has been a specialist in ETP for now two decades, with these markets developing at an exciting pace not only in the traditional environment, U.S., Europe, but also in new markets like Asia. I believe that this historical strength is extremely important. The second dilemma we have been very impressed about is that as much as we talk about investing more in technology, and we will continue to invest more in technology, I have found a team of professionals from front office to Risk to back office to Legal, the team in Europe, Asia, or the U.S., that are extremely committed to deliver on the commitment that we made to the Board when the capital expansion plan was.
We have a very motivated and enthusiastic team that is ready for the new challenge and the new development we're going through. If I were to pinpoint a few additional points that I find very interesting with Flow Traders, one of them is obviously our historical presence not only in the U.S. but in Asia, which is a key area of focus for us for the next few years. We've been a market maker in Asia for a long time. I will also add the incredible connectivity both from a technical standpoint in terms of market and technical connectivity, but also the great relationship we have formed over the past few years and few decades with most of the strategic counterparts and players in the market we want to invest in.
Last, probably not least, I think we also need to acknowledge that Flow Traders has been one of the early movers and early believers into the digital assets and crypto market. While maintaining our traditional risk profile, we've managed to develop a knowledge and capabilities in these fast developing markets that are probably second to none today in the market there. Thanks for that. Did I answer everything or did I forget something?
Yeah, I think I was also curious if you already kind of identified some, let's say, low hanging fruits in terms of improvement and if you can share. That with us already,
I think everybody wants low hanging fruit. I would say that for me, the lowest hanging fruit, maybe the one I feel very comfortable with, is that we need to acknowledge that it's a company that up until the summer of 2024 was used to work in a very capital constraints environment. Thanks to the work by the Board, thanks to the work by the team, thanks to the Board, by the finance team, we are now in a world where our expansion in terms of capital is very, very. I think one of the, to some extent, low hanging fruit I can see is how to make sure that the way we organize ourselves, we allocate the capital dynamically, we get used to be a bigger trading firm, and we maximize every single opportunity we have.
It's probably one of the low hanging fruits because we have the knowledge, we have the skill set, we have the product, we are still learning how to maximize the inflow of capital. It will be a learning curve that I'm going to take with me and the leadership team. I will also use my background as a former trader and market guy for 20 years to really support the management team and the trading to make sure that we maximize these opportunities over the short term while we also use our capital to build the number of new products, strategy, technology over the medium to long term.
Clear? I think what you said in the last sentence is pretty much kind of an extension to my questions predominantly on the trading capital itself. If you can, you know, kind of run us through the strategy of this EUR 150 million net, so if you take out also the EUR 25 million that you're going to pay back to the bank, so EUR 150 million net in trading capital strategy in terms of deployment and maybe if you can say something extra on the regional allocation, asset class allocation, perhaps something on returns on trading capital, etc. Anything that I can find interesting regarding the strategic deployment of this extra buffer, I'd appreciate that. Next to that, what kind of operating leverage do you think you can achieve after the full deployment of this trading capital? Perhaps operationally, what do you think Flow Traders needs to change to be able to actually deploy successfully this extra capital buffer?
Alex, you want to take it?
Yeah, happy to take Julian. About $150 million net. This is a facility we secured for the long term. It will be a six-year facility. We believe that if there's now about the volatility, we can deploy everything at very accretive returns. At the same time, we aim to increase the baseline and to find new strategies where we gradually deploy the rest of the capital. We're confident that also with the generation of additional profits and this facility that speed things up, we will grow into new strategies and are able to trade bigger sizes. The ETF market alone still has grown 10% - 15% per year. That warrants a bigger book and more trading capital. We have specific growth areas like, for example, crypto. Asia is a big strategic area for us, so there we'll deploy the additional capital.
Maybe to answer another question you had, I don't feel like our current operational setup or organizational setup is not allowed to cater for this additional capital. We have obviously, as a market maker, a very much tech orientated business. We can scale our operation, we can scale our volumes, we can scale our sizes without significant additional cost. Our risk framework and our risk management, our compliance framework and compliance management, our operational framework are more than capable of absorbing these additional trading activities.
Perfect. Is there then kind of an indication that it could give us regarding the core guidance for 2026?
Not yet. I've just been here for a few weeks.
Understood. All right, thanks and good luck.
Thank you.
Thank you.
The next question comes from Mike Werner from UBS. Please go ahead.
Thank you very much and welcome aboard. Thomas, two questions please. First, when you talk about the expansion into Asia, I think you mentioned earlier that a good portion of the volumes are currently happening within China, and obviously there's certain capital controls there. How important is China to that expansion in Asia for you? That's the first question. The second question, we've seen a number of companies reporting Q3 results. Trading activity revenues tended to be pretty good, obviously not as strong as Q2, but definitely higher than where we were last year. Saw it from some of the listed market makers as well. Again, Flow Traders, decline in revenue is a bit of, I guess kind of stands out given the trends that we have seen elsewhere.
I was just wondering, was there anything specific in terms of the mix or products or strategies that Flow was implementing where on a year-on-year basis and relative to the past couple of quarters, not just Q2, we saw a decline in NTI. Thank you.
I will start to answer a bit and then I will let Alex and Marc complete. Regarding Asia, and again, when we say Asia, as you rightly mentioned, Asia is a big continent with lots of different countries. China is part of our strategic focus. We are very aware of the capital constraints and the capital controls as part of our business development. We have also managed to allow to set up new structure and financing capabilities for Asia in general that will be able to allocate across different activities. To answer back to your specific question, yes, China will be one of our strategic country of focus. I've already been in Hong Kong meeting our teams in September and we're going to have some dedicated focus or we're having some dedicated focus on the most efficient way to deploy over there.
Asia in general, China in particular but not only, is an area where the wealth is going very fast and an area where the development of markets has caught up over the past few years to European and U.S. market. We will be one of the key players in that market in Asia, including in the China market. Regarding the questions about our performance, I will let Alex and Marc deploy. A little bit better. Yes, we would have liked to do more. Is it the best quarter we have ever had? I would say in terms of performance, no. On the other hand, we don't see that at all as structural headwinds. It does happen from time to time that from one quarter to another we underperform our peer or we underperform our expectation, which has been the case in Q3. I don't see that, the management team doesn't see that, and maybe Alex and Marc can say a little bit more about it.
Yeah, yeah. Let's not forget indeed we had just had three running quarters over $100 million. Our business, the quarter -on- quarter, can be a bit more volatile. As said, we're not happy with the results. Q4, while it's still young, already shows an improvement from the performance. We don't see it as a structural thing. We're still committed to our key markets as well as new growth initiatives that. We have on the agenda.
Thank you, that's very helpful. Cheers.
All right, we can now head to the written questions that have been submitted. The first question reads: We know Flow Traders' model is well suited to periods of market volatility. I'm curious about the upper end of that spectrum. How do you manage and mitigate risks during moments of extreme market turbulence? Could you comment on how the firm managed through the crypto volatility on October 10th?
Yeah, I can take the question. The question is, I believe from Igor. Great question. Let me help to explain the answer to the question. Our systems are optimized for any level of volatility, and we perform very well in those moments of volatility. Everything in our system is automated. Our risk management is optimized over decades, and the team has multiple decades of experience. After every event, we improve our strategies and risk controls such that we will be even better on the next event. In the crypto volatility of October 10, we saw extreme situations, and our systems performed well. We came out with a profit.
Okay.
Given that we don't have any more questions, I just wanted to add a few words before Eric can conclude and close the call. Sorry. First of all, I would really like to thank the team and their commitment in welcoming me. I would like to give a special thanks to all the teams in Finance, Legal, as well as our two partners who have successfully closed the strategic financing for Flow Traders Ltd that will help us accelerate our growth. I would also like to thank all the key partners that I have been able to meet and have much more to meet over the next few weeks that have shown their commitment and their trust in Flow Traders Ltd. As we have also mentioned in the document published, we will organize next year Capital Markets Day where we will be presenting an update of our strategy, our ambition, and our expansion plan.
Give me a few months again, I still have a lot to learn and the team is really working hard to put me up to speed. Overall, I'm extremely confident that we are one of the European and one of the global leaders in our market. I'm very comfortable, I'm very confident with the support I've received from the exec teams. I would also like to thank the Board for their support over the past two weeks and I'm very much looking forward to the SGM in a couple of hours who hopefully will confirm me as the new CEO. Thank you very much.
Great. Thank you everyone for dialing in today. Please note that we will host our next analyst call when we release our fourth quarter results next February. Details and timing for the call will follow in due course. This now ends the call. Thanks and have a great day.