Aquis’ diversification strategy a significant factor in strong H1 results

Aquis reported an overall profit across all four of its businesses: markets, stock exchange, technologies and data.

Aquis reported a 17% increase in its net revenue at £9.7million for the first half of the year, and a profit of 1.1million before tax, up 64% from the previous period.

The Aquis markets division delivered strong results, following on from the integration of Aquis Matching Pool last year, with revenues spurred on by the diversification of the business, Alasdair Haynes, chief executive of Aquis, told The TRADE.

“If we look at Aquis Markets, what we’ve seen is a decline in the market as a whole of around just over 20% in lit trading and a lot of people focus on market share […] But I think the fact that we grew our revenues because we diversified that business is really satisfying.

“We made the decision a couple of years ago to move away from just the one thing that we did and now we have a closing auction, periodic auctions, the Aquis matching pools, a change to our proprietary trading rules – we’re really opening up the business to have access to the whole market, rather than different segments of the market and it’s been very pleasing to see that the diversification has paid off.”

Read more: Aquis Exchange acquires minority stake in US block trading start-up OptimX Markets

Aquis markets currently holds a 5.1% market share, which Haynes said was a number which he’d like to see continue to grow, expected to be boosted significantly in the medium term as a result of continued diversification.

Notably, last week Aquis Exchange relaxed its ban on proprietary or non-client firms on its UK and EU trading platforms, set to allow access for more aggressive proprietary trading firms. Following the implementation of the new regime in Q4, the exchange will allow these entities to interact with members that have opted in to trade against them.

Concentrating on the execution of this new rule is a main priority for Aquis going forward, The TRADE understands, with customer testing a key focus.

The business also reported overall profit across the other three areas of its business: data, stock exchange, and technologies.

Aquis data saw a 34% increase in revenues, with expectations that this will continue on its upward trajectory as consolidated tapes (CT) – both in the UK and the EU – come to fruition. 

Speaking to The TRADE, Haynes highlighted that the progress of CTs is expected to disproportionately benefit Aquis: “We do not charge our members data fees, members of the Aquis exchange get free data […] For us the consolidated tape means we will get revenue where we’re not getting any revenue today, so our members would no longer get this for free because it’s out of our control.” 

He added: “It’s now not a question of ‘if’ we get a consolidated tape, which it’s been for years, it is a matter of ‘when’. I think we’re two to three years away.” 

Addressing the technology side of the business, Haynes highlighted the success of the contract pipeline.

Speaking in an announcement, he said: “Our Aquis Technologies contract pipeline has continued to develop as expected, with a renewal and an extension over the period demonstrating the long-term nature of these relationships.” 

He told The TRADE that Aquis Equinox – the worlds first 24/7 matching engine – launched in Q1 had put the business on the map: “The great thing about 24/7 is the economic benefit […] without any loss of performance and that is the thing that is most appealing. We think that that is not just suitable for the financial service industry but longer term this could be used outside of financial services.

“We feel very much the leaders in cloud 24/7 exchange technology.”

Elsewhere, the Aquis Stock Exchange welcomed five new listings throughout the period, less than half compared to the 12 in H122, which the business stated was reflective of a general slowdown in IPO activity.

Despite this, the business has stated that it remains positive on the long-term performance for the exchange – which has remained profitable in the first half of 2023 despite challenging market conditions.

Speaking to the overall results, Haynes told The TRADE: “We are absolutely in line with market expectations, we’re in line with our board expectations […] we’re comfortable with what the analysts are predicting us to make and where we are today.

“It’s an exciting time for us, in the five years we’ve never missed a number […] even in difficult market conditions we’ve been able to put out a really good set of results where you see all four business divisions grow and you see revenue growing in each one. The future looks bright for us even in these poor conditions.”