Exchanges Continue Data Revenue Rises

Nasdaq posted positive revenues for Q4 of $536 million, up 4 percent year-on-year, citing the acquisition of Dorsey, Wright & Associates, the data analytics, passive indexing and smart beta strategies company it bought last year, as a reason for rising profits in its Information Services division, where revenues rose $14 million from $127 million in Q4 2014. An $8 million “organic increase” and $9 million generated by Dorsey Wright was partially offset by a $3 million decrease due to changes in foreign exchange rates. Data products revenues totaled $98 million for the quarter, up $7 million year-on-year. This was a result of increased revenue from proprietary and shared tape revenue plans, as well as the inclusion of revenue associated with the Dorsey Wright acquisition. Index Licensing and Services revenues also rose by $7 million to $29 million. 

Meanwhile, the Chicago Mercantile Exchange’s market data and information services revenue was a positive note for the exchange when overall net income was down. The exchange posted revenues of $291.7 million for Q4 2015, compared to $306.5 million for Q4 2014. Revenue for market data and services increased 11 percent to $99.1 million in Q4 2015.

Intercontinental Exchange reported revenues of $875 million for Q4 2015, up from $800 million for the same period last year. In a comment posted online which accompanied the exchange’s results ICE chairman and chief executive Jeffrey Sprecher attributed this “record performance” to strong demand for data, listings and risk management tools, and stated that the acquisition of Interactive Data, along with “many other strategic initiatives,” will likely lead to more strong growth in 2016. Consolidated data services revenues for Q4 2015 were a $257 million, up 35 percent year-on-year from $189 million, with its acquisitions of Interactive Data and Trayport contributing $50 million.

The Johannesburg Stock Exchange reported growth across all business lines, leading to a 20 percent increase in overall revenue to R2.1 billion ($135 million), of which R226 million ($14.5 million) was from market data, an increase of 16 percent. Co-location revenue grew from R9 million ($577,000) to R19 million ($1.2 million) in its first full year of operation, accounting for 26 percent of trading value on the exchange during 2015.

In Europe, pan-European exchange Euronext saw full-year revenue from market data and indexes rise 6.9 percent to €99.8 million ($110 million). Euronext attributes the increase to sustained market data activity and a positive start to its new global indexes server, which it launched in September, as well as a new online corporate action data portal and associated pricing service that it launched in October. Euronext reported net profit for 2015 of €172.7 million ($189.6 million). 

Deutsche Börse generated revenue of €589.8 million ($589.6 million) for Q4 2015, up from €544.3 million ($597.6 million) for 2014, but bucked the trend with a decrease in revenue for its Market Data + Services division of €96.7 million ($106.7 million), for Q4 2015, down from €99 million ($109.2 million) for the same period last year. However, the exchange noted that its overall Market Data + Services revenue for the year was up, bringing in €411 million ($453.4 million) for full-year 2015, compared to €380.5 million ($419.8 million) for 2014.

Rafah Hanna, principal of consultancy DataContent, attributes the continued increases in exchange data revenues to the way exchanges license data—which they collect from user firms in the form of quotes and trades, then sell back to those user firms for a fee. Exchanges’ reliance on data to maintain overall revenues is an argument for the need of a “flat fee for data, irrespective of usage type,” Hanna adds. “Is it the business of the exchange to interfere in the manner of how a firm utilizes the data and creates value? Whenever I hear an exchange representative say ‘We are charging depending upon the value you get from the data,’ it makes me angry, frankly. The exchange is seeking to take a cut, commission, and share—call it what you will—of the intellectual property generated value/profit of the client.”