Swiss exchange operator the SIX Group’s half yearly net profit rose 32%, which the company has attributed to cost-cutting measures and greater activity on financial markets.
Profits jumped 31.9% to CHF 93.1 million for H1 2013, compared to the same period last year, when adjusted for the sale of its 15% stake in derivatives exchange and clearing house Eurex, to co-owner Deutsche Börse last year.
Profits were buoyed by a 2.2% dip in operating expenses despite a 4.3% upturn in operating income, which SIX said was evidence of changes to its cost structure enacted last year. The firm’s payment services sector lead overall growth, with a 6.5% rise in volumes passing through its international acquisitions division, which reached CHF 23.2 billion.
“Six achieved a strong operating profit in the first half of 2013,” said Urs Rüegsegger, CEO of SIX Group. “This is partly due to an increase in revenues in all business areas particularly international transitions in payment services, and the cost-cutting measures introduced in the previous year.”
The SIX Group owns national stock exchange SIX Swiss Exchange and pan-European post-trade business SIX Securities Services, which includes a central counterparty for equities and central securities depositary (CSD).
The exchange received a modest benefit of 1.3% in operating income from greater stock exchange traffic, but was not commensurate with the 12.4% rise in trading volumes, which hit CHF 530 billion. The number of stock exchange transactions also grew 6.4%.
The sale of Eurex, which has OTC derivatives clearing capabilities, will be in part replaced by Norwegian CCP Oslo Clearing, which clears derivatives trades, including OTC derivatives. The US$32 million sale was agreed last year and will formally occur in May, when a no-compete agreement expires with Deutsche Börse.
Regulatory change in the region will open up new business opportunities for SIX Group. The European markets infrastructure regulation, for instance, will mandate the central clearing of OTC derivatives trades, while CSD regulation and European settlement initiative TARGET2-Securities may tilt the competitive landscape in the region towards established players like SIX.