Euronext sees double digit growth in FX revenue, trading volumes

abdelaziz Fathi

Euronext, which operates the biggest pan-European exchange, said its second-quarter revenues improved to a record €374.7 million, up 14 percent from a year earlier.

The exchange operator attributed the rise to strong performance in listing and post-trade businesses, as well as significant contribution of the Borsa Italiana.

Trading revenue in Q2 2022 was on the uptick, having increased by 15 percent on a yearly basis to €129.2 million, primarily driven by the consolidation of Borsa Italiana capital markets combined with cash equity volumes. The exchange operator also attributes the solid performance to a robust performance across all asset classes in a volatile market environment. Cash trading revenue was €75.3 million, up 7 percent and reflecting strong revenue capture. Fixed income trading revenue hit €24.9 million in the three months through June 2022, or up +44% from a year earlier.

Post-trade revenue also grew 13 percent to €93.9 million thanks to the strong performance of the clearing activities of its Italian units. In addition, custody and settlement revenue scored a double-digit increase to €62.5 million even though the Nordic CSDs was less dynamic reflecting notably normalised levels of retail activity.

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

FX franchise shines again

Other business highlights show that non-volume related revenue accounted for 59 percent of the group’s total revenue in Q2 2022, virtually unchanged from a year earlier, reflecting a solid quarter for non-volume related business.

The pan-European exchange posted €221.7 million in Q2 EBITDA, helping it earn a better-than-expected €118.9 million in profit for the period, which was up 12 and 37 percent, respectively.

On the FX business front, Euronext reported an average daily volume on its spot foreign exchange market at $23.6 billion for the Q2 2022, up 27 percent compared to $18.6 billion a year ago. The spot foreign exchange division yielded €7.3 million in revenues, up from €5.7 million in Q2 2021, reflecting higher trading volumes as FX markets recorded heightened volatility through the quarter.

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

Commenting on the results, Stéphane Boujnah, CEO and Chairman of Euronext, said: “A key milestone in our ‘Growth for Impact 2024’ strategic plan was achieved with the successful migration of our Core Data Centre from Basildon, near London, to a fully green data centre in Bergamo, near Milan. This migration enables Euronext to deliver the first revenue synergies targeted under our 2024 strategic plan. This success paves the way to the migration of Italian cash and derivatives markets to the Euronext state-of-the-art European proprietary trading platform Optiq® by 2023. In addition, we pursued our integration work and we reached €24.1 million cumulated run-rate annual synergies in relation to the acquisition of the Borsa Italiana Group at the end of Q2 2022, 14 months after the closing of the transaction.”

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