Borsa Italiana contributes 30pct of Euronext Q3 revenue, FX business disappoints

abdelaziz Fathi

Euronext, which operates the biggest pan-European exchange, said its third-quarter revenues improved 71 percent to €350.6 million. The exchange operator attributed the rise to a strong performance in listing and post-trade businesses, as well as significant contribution of the Borsa Italiana.

Euronext

Trading revenue was on the uptick, having increased by 64 percent to €124.2 million, primarily driven by the consolidation of Borsa Italiana capital markets combined with cash equity volumes.

Post-trade revenue also grew 86 percent to €83.1 million thanks to the strong performance of the clearing activities of its Italian units. However, custody and settlement revenue growth in the Nordic CSDs was less dynamic than previous quarters reflecting notably normalised levels of retail activity.

The pan-European exchange posted €203.0 million in second-quarter EBITDA, helping it earn a better-than-expected €145.8 million in profit for the period, which was up 72 and 71 percent, respectively.

On the FX business front, Euronext has reported an average daily volume on its spot foreign exchange market at $17.5 billion for the Q3 2021, down 9.4 percent compared to a year ago. The spot foreign exchange division yielded €5.6 million in revenues, down 4 percent from €5.8 million in Q3 2020.

Euronext FX franchise disappointed expectations that were already heightened for 2021 after the exchange posted record trading volumes that were more than double the figure it typically generated before the pandemic.

Meanwhile, non-volume related revenue accounted for 55 percent of Euronext’s total revenue, up from 49 percent in Q3 2020, reflecting the expanded listing and post-trade business. Fixed income trading revenue also increased to €23.8 million, mainly due to a double-digit growth in MTS cash trading activities.

Commenting on the results, Stéphane Boujnah, CEO and Chairman of Euronext, said: “In the third quarter of 2021, Euronext revenue grew by 71.2% to reach €350.6 million, driven by double-digit organic revenue growth, especially in listing, trading and clearing activities, and the continued good performance of Borsa Italiana, MTS, CC&G and Monte Titoli. EBITDA grew faster than revenue, to €203.0 million, thanks to a strong cost discipline to limit the impact of integration costs. Adjusted EPS increased by 18.1% to €1.21 per share as a result of this solid operating performance.”

Euronext said Borsa Italiana Group contributed €121.1 million to revenue for full quarter of consolidation. Last week, Euronext has appointed Fabrizio Testa as CEO of Borsa Italiana, and as head of fixed income trading. Testa, who currently heads the Italian group’s bond platform MTS, replaces Raffaele Jerusalmi as the CEO of the recently acquired Milan bourse.

The exchange operator said the transaction with the Milan-based stock exchange diversifies its business mix into new asset classes, and strengthens its post-trade activities. In addition, it gives Euronext a clearinghouse for the first time, as well as a securities depository and bond platform.

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