Euronext grapples with weak FX volume in October

abdelaziz Fathi

Pan-European exchange, Euronext has reported an 11 percent drop in the average daily volume on its spot foreign exchange market. The ADV figure stood at $21.5 billion in October 2022, which is down from September’s $24.2 billion.

Taking a year-over-year perspective, Euronext’s currency turnover was higher by 11 percent from $19.3 billion reported back in October 2021.

In terms of its aggregated monthly turnover, Euronext FX reported $452 billion, which is lower by 15 percent from $532.8 billion that changed hands in the previous month.

Following the boom in activity seen at major FX trading venues in the third quarter of 2022, the institutional ECNs were in a sea of red over this month. Almost all institutional platforms reported double-digit drops in their monthly volumes.

Euronext, which operates stock and derivatives markets in countries such as France, reported an average daily volume on its spot foreign exchange market at $21.7 billion for the Q3 2022, up 24 percent compared to $17.5 billion a year ago. The spot foreign exchange division yielded €7.3 million in revenues, up from €5.6 million in Q3 2021, reflecting higher trading volumes as FX markets recorded heightened volatility through the quarter.

Founded as a joint venture by the Swiss bank Credit Suisse and FX broker FXCM in 2012, Euronext FX (formerly FastMatch) provides an electronic currency trading platform  mostly for institutional clients such as banks, asset managers and hedge funds. The FX unit of the franco-dutch exchange operator operates an electronic communication network (ECN) for currency trading and has matching engines in New York, London, Tokyo, and Singapore.

FastMatch was acquired by Euronext in 2017 as part of the exchange’s strategy to diversify its top line and extend its proposition to an additional asset class.

Euronext, which operates the biggest pan-European exchange, reported last month that its third-quarter revenues were virtually unchanged from a year earlier.

Trading revenue in Q3 2022 was lower by 6 percent on a yearly basis to €118 million, primarily driven by lower cash equity and MTS Cash volumes. The drop was partially offset by yield management and strong quarters for FX, derivatives and power trading.

Meanwhile, post-trade revenue grew 3.7 percent to €86.2 million thanks to the strong performance of the clearing activities of its Italian units. In addition, custody and settlement revenue scored a mild increase to €57.1 million even though the Nordic CSDs was less dynamic reflecting notably normalised levels of retail activity.

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