Cboe reports higher Q2 revenues, but profitability slips

abdelaziz Fathi

Cboe Global Markets, Inc. (Cboe: CBOE) today released a set of robust financial metrics for second quarter 2021, which showed a 18 percent YoY jump in revenues, according to a company press release.

The Chicago-based exchange benefited from the heightened volatility over the last three months, having collected $350.6 million in net revenue compared to $296.9 million in the Q2 2020. The solid year-over-year growth primarily reflects notable increases in net transaction and clearing fees, as well as access and capacity fees.

Cboe and other exchanges operators make the most of their revenue through transaction fees, which rise and fall in tandem with trading volumes. As such, the higher Q2 volatility and overall rise in options turnover helped push transaction fees to increase at Cboe versus the second quarter of 2020.

In the reported quarter, Cboe’s FX revenue rose slightly to $13.8 million or less than one percent from $13.7 million in the year prior. Cboe’s institutional spot FX platform saw its average daily trading volumes amounting to $32.5 billion for the quarter, up 2 percent from Q2 2021. Net capture per one million dollars traded was $2.71 for the quarter, down 2 percent compared to $2.77 in Q2 2020.

In addition, Cboe reported total operating expenses at $160.6 million for Q2 2021 versus $135.2 million in the same period 2020. The higher expenses were said to reflect increases in compensation and benefits, royalty fees, professional fees and outside services.

According to the update, adjusted operating expenses, which exclude acquisition-related expenses and other unusual items were 128.3 million, up 34 percent compared with $95.8 million in the second quarter of 2020.

Cboe has recently expanded its business operations with a raft of new acquisitions. Earlier this year, the exchange operator completed its takeover of dark-pool stock trading platform BIDS Trading, the largest block-trading ATS by volume in the US, for an undisclosed price.

The deal for the alternative trading system (ATS) provides Cboe with further inroads into the expanding world of off-exchange trading.

The acquisition of BIDS Trading came shortly after Cboe bought MatchNow from Virtu Financial. The broker-neutral dark pool commanded more than 5 percent of total stock trading and 65 percent of anonymous trades in Canada where over $5 billion worth of equities exchange hands each day.

All told, Cboe’s net income allocated to common stockholders in Q2 2021 fell to $105 million, or $0.98 per diluted share, down from $113 million and $1.03 in the second quarter of 2020.

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