Nasdaq reports record revenues in Q3

Exchange operator Nasdaq OMX saw significant revenue growth in the third quarter of 2013, largely due to acquisitions.

Exchange operator Nasdaq OMX saw significant revenue growth in the third quarter of 2013, largely due to acquisitions.

Net revenues in Q3 hit US$506 million, up 23% from US$412 million in the same period last year and a new quarterly record, with organic growth accounting for a 4% increase in revenue year-on-year.

The group has made several major acquisitions in the past year, including benchmark US treasury trading platform eSpeed and Thomson Reuters’ business services arm. The latter acquisition reflects a growing need for exchange operators to expand beyond their core business due to depressed market volumes and lower margins.

Commenting on the acquisitions, Bob Greifeld, CEO of Nasdaq OMX, said: “Our acquisitions of eSpeed and the IR, PR, and multimedia businesses of Thomson Reuters are ahead of plan and are accretive to earnings, and although we have more to do to ensure they realise their full potential, our confidence has never been stronger in our ability to continue to service the market, deliver for our customers, and create returns for our shareholders."

The firm’s technology and corporate solutions business now accounts for a combined 41% of total net revenues, slightly more than its core market services business at 40%.

Its derivatives business sales reached $US71 million in Q3, down slightly from US$72 million a year ago due to lower industry volume and market share. Equities revenue was also down by US$1 million to US$46 million due to lower market share in the US, though this was partially offset by increased income from European equities.

The group also reported positive results from its Nordic derivatives clearing house, Nasdaq OMX Clearing, with total cleared volume of SEK denominated interest rate swaps reaching SEK 100 billion (US$15.6 billion). It said it is now the second largest interest rate swap clearing house in Europe.

The clearing business has seen significant changes in its structure over the past year to become compliant with the European market infrastructure regulation’s central counterparty requirements. It appointed independent directors and moved exchange related operations to another company within the group. Its clearing licence application to the Swedish Financial Supervisory Authority has been submitted and approval is expected before the end of 2013.