Exchanges See Data Revenues Falter, Growth from Diversification

Exchanges continued to report revenue rises for the second quarter of 2013, though many showed drops—or minor increases—in market data revenues, despite more positive trading activity overall.

Greek exchange operator Hellenic Exchanges Group reported a 561 percent jump in overall second-quarter revenues to €50.9 million ($67 million), benefiting from a surge in cash market volumes. Revenues from market data—which include the rebroadcast of data from the ATHEX and CSE markets in addition to the sale of statistical information—fell 10 percent to €1.9 million ($2.5 million) for the first six months of 2013, though other information services-related revenues rose 25 percent to €0.565 million ($0.75 million), including a 103 percent rise in revenues from co-location services to €0.134 million ($0.177 million).

The New Zealand Exchange (NZX) saw a surge in market activity, reporting a 30 percent increase in Q2 revenues to NZ$16.2 million ($12.5 million), driven by “favourable market conditions,” the recently established Fonterra Shareholders’ Market, government reforms, and the growth in the KiwiSaver voluntary long-term savings scheme, which contributed to an 18 percent rise in average daily trades. However, combined securities and agricultural data revenues fell by just over 6 percent for the quarter to NZ$10.12 million ($7.5 million), comprising NZ$4.423 million ($3.4 million) in securities data and 5.697 million ($4.38 million) in agricultural data.

The Moscow Exchange saw its Q2 2013 top line increase by 15 percent to RUB (Russian Ruble) 8.5 billion ($255 million) compared to RUB 7.40 billion ($222 million) in Q2 2012, driven by revenue stream diversification, the launch of new derivative products and a 22 percent boost in the number of contracts traded over Q2 last year. However, the exchange’s information services income fell 51 percent from RUB 133 million ($4 million) in Q2 2012 to RUB 65 million ($2 million) as a result of the introduction of a new fee structure following the merger of the RTS and Micex exchanges.

Brazil’s BM&F Bovespa reported a 10 percent increase in revenue to BRL (Brazilian real) 668.8 million ($283 million) compared to Q2 2012, with profits up 13 percent to BRL423 million ($179 million) as a result of increased cash market activity, driven by a reduction in trading fees for all investors, leading to 13.9 percent growth in foreign investors’ average daily trading volume, due to the activity of high frequency traders. Revenues from data sales to vendors fell by less than 1 percent to BRL17.2 million ($7.2 million) over Q2 last year, but increased by almost 3 percent over the first quarter of 2013.

Meanwhile, the Warsaw Stock Exchange Group saw revenue drop 8 percent to PLN (Polish zloty) 64.6 million ($19 million), compared to Q2 2012, driven by a lack of growth in its commodity market and increases in expenses. Market data revenues also fell by 8 percent to PLN 8.57 million ($3 million) compared to the same period last year.

Robert Stowsky, analyst at Boston-based research firm Aite Group, says growth at large is expected to continue for most exchanges, reflecting a move by trading firms away from over-the-counter products to exchange-traded products as a result of regulatory pressures.

“Exchanges will continue to look for revenue sources from non-trading related services, such as offering machine-readable news feeds, reference data, and document management,” Stowsky says.  “As a response to falling equity volumes, expect to see the equity exchanges continue to add new derivative products. Additionally, geographic expansion through either partnerships or acquisitions is likely to continue as well.”