A 40% increase in equity trading volumes on pan-European platform Turquoise over the 12 months to June helped boost overall secondary market revenues at the London Stock Exchange Group (LSEG), according to the firm’s Q1 2014 results.
In its interim results statement for the three months ending 30 June, LSEG announced a 16% increase in capital markets revenues over the same period last year, driven by a doubling in the number of new issues and improvements in fixed income and Italian cash equity volumes, as well as Turquoise’s continued strong performance.
Announcing an 11% increase in Q1 2014 secondary market revenues over Q1 2013, LSEG said trading on Turquoise had risen 40% in the period reported, with an average daily value traded of €3.83 billion. This “buoyant trading” offset a 5% fall in average order book daily value traded for UK cash equities.
Increased secondary market revenues were also supported by a 20% increase in the number of Italian equity market trades compared with the three months to June 2013. Fixed income trading revenues rose 28% to £19.9 million in the quarter, helped by a rise in organic revenue from MTS and BondVision.
In June LSEG overtook BATS Chi-X Europe as the largest equity trading venue operator in Europe, according to Thomson Reuters Equity Market Share Report.
On a venue group basis, the LSEG accounted for 20.3% of all equity trading in Europe in May (€160 billion turnover) compared with BATS Chi-X Europe at 19.8% (€156 billion turnover). In addition, Turquoise achieved a 9.9% share of European equity trading.
Turquoise’s stronger performance over the past 12 months has been driven in part by the popularity of its Turquoise Uncross functionality. “Randomly uncrossing passive orders resting over meaningful time windows makes latency arbitrage strategies uneconomic. The natural flow resting in Turquoise Uncross is attractive to the buy-side,” CEO Robert Barnes told thetradenews.com in May.
Turquoise intends to go live with its new Block Discovery services – which aims to help market participants trade large blocks of stock on the multilateral trading facility’s dark book – on 20 October.
Commenting on the current trading conditions, LSEG said Turquoise had delivered a 23% increase in value of pan-European equities traded in July compared with July 2013. UK cash equity trading volumes rose 6% in July versus the same month last year, with Italy experiencing a 25% rise in number of trades over the same period. The firm’s fixed income platform MTS reported 27% annual growth in cash trading and a 4% rise in repo volumes in July.
LSEG also reported a 4% increase in revenues from post-trade services and an 8% rise in total income generated by clearing house LCH.Clearnet on a pro forma, constant currency basis, due in part to growth in OTC and commodities revenues.
In the three months to 30 June, total adjusted income for the group was up 16% on the same period last year at £323.9 million. Adjusted operating expenses grew 8% to £175.7 million, which the LSEG said reflected the inclusion of acquisitions such as LCH.Clearnet. The firm’s operating profit was £102 million.
In June, the LSEG confirmed that it intends to buy US-based index provider and investment management services firm Russell Investments for US$2.7 billion. The acquisition will be funded by a rights issue.