Euronext reports drop in FX volumes as year-end lull weighs

abdelaziz Fathi

Pan-European exchange, Euronext has reported a 17 percent drop in the average daily volume on its spot foreign exchange market. The ADV figure stood at $17.4 billion in December 2021, which is down from November’s $21.1 billion.

Taking a year-over-year perspective, Euronext’s currency turnover was also lower by 12 percent from $19.8 billion reported back in December 2020.

In terms of its aggregated monthly turnover, Euronext FX reported $407 billion, which is down 12.7 percent from $466 billion that changed hands in the previous month.

The average trading volume in 2021 was below the $20 billion mark, down from $22.3 billion in the comparable period the year earlier. In 2020, the volume had jumped to record levels due to frenzied buying and selling activities. Trading has been driven by investor fears that despite the new vaccines, coronavirus will continue to put a damper on the world economy.

In 2020, however, Euronext has discontinued its FX Tape service, which provides a central reference point for prices of spot FX transactions. The termination occurred around December 2020 and, as a consequence, the FX Tape volume chart was removed from Euronext FX website.

Initially launched in 2017, Euronext FX Tape was modelled on similar projects for other asset classes such as equities, and it consists of ECNs, banks and other financial institutions engaged in the FX market to provide a last-sale data feed with price, size and timestamps. The idea itself made sense due to the decentralized and international nature of the FX markets and the lack of a single regulatory authority sitting above it.

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FX franchise disappointed expectations

Euronext, which operates bourses in Paris, Amsterdam, Brussels, London, Lisbon and Dublin, revealed in November that 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.

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.

On the FX business front, Euronext 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.

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