Improved earnings from technology, clearing and market data services have offset reduced transaction volumes at both Nasdaq OMX and Deutsche Börse while London Stock Exchange Group has benefited from a major boost in trading activity.
The latest reporting season has seen mixed performance for stock exchange operators as some markets, particularly in continental Europe, suffer from low trading volumes.
Nasdaq OMX saw particularly strong growth in its ancillary business lines, with non-transaction based revenues up 19% in Q2 compared to the same period last year, now accounting for 74% of total second quarter net revenue.
Overall Q2 revenues for the group were up 16% to US$523 million including acquisitions, while it saw 4% organic growth.
"Once again, our diverse businesses generated solid organic growth in revenues despite a continued low volatility trading environment," said Bob Greifeld, CEO, Nasdaq OMX. "Nasdaq OMX's strong and improving competitive position, as measured by the 59% win rate in US IPO listings and increased market share in cash equity trading coupled with the continued client traction in our technology and information businesses, provides confidence in the balance and diversity of our model to succeed in all cycles."
Revenue from derivatives trading and clearing dropped year-on-year by 13% to US$66 million, while equities trading business saw an uptick of 11% to US$57 million.
Deutsche Börse blamed tough trading conditions for a slight fall in revenues, which reached €488.4 million, down 1.1% from €497.1 million in Q2 2013.
However, similarly to Nasdaq, its non-transactions business helped to offset poor performance in equities and derivatives trading.
Gregor Pottmeyer, Deutsche Börse AG’s CFO and Executive Board member for human resources, said: “Second quarter results were negatively impacted by the low equity market volatility and extremely low interest rates, although the Group was able to offset this in part with new record highs recorded by Clearstream and the positive development seen in the Market Data + Services segment.
“The company’s diversified business model means that its earning power remains strong even in periods of low volatility, and it considers itself in a good position to meet its objectives for 2014.”
The German-headquartered exchange operator said it plans to continue its push into Asia to help further diversify its business and insulate it from cyclical weaknesses in core European markets.
London Stock Exchange Group (LSEG) bucked the trend however, reporting a major increase in its capital markets trading revenues of 16%, up to £87 million in Q2 2014 from £75 million in Q2 2013. New issues doubled as growing confidence in the UK economy led to more IPOs, while secondary markets performed well due to improved trading in fixed income and Italian cash equities, the group said.
The group also performed well in clearing, with its LCH.Clearnet subsidiary increasing sales from £49 million to £83.2 million year-on-year, a 70% increase.
However, in contrast to its competitors, the group’s technology services division slipped, with revenues down 8% to £14.3 million in Q3. LSEG blamed the phasing of customer deliveries for reduced tech sales.
Information services saw a small increase in earnings of 5% to £88 million, though the recently confirmed acquisition of Russell Investments, which is set to complete in later this year, is likely to add a significant boost to this part of LSEG’s business.