Euronext saw record income and revenue in Q1 2024, up 8% YoY to €401.9 million.
In the exchange’s results call, CEO and managing board chairman Stéphane Boujnah stated that this strong performance has been driven by activity in non-volume related businesses, growth in demand for fixed income and power trading data and the impact of the November 2023 expansion of Euronext Clearing into European equities.
Also contributing to Q1 performance was the migration of Italian derivatives to the Optiq platform – the final stage of the Borsa Italiana migration – and the launch of non-displayed order book Mid-Point Match.
On Mid-Point Match, Nicolas Rivard, global head of cash equity and data services, stated during the results call that the exchange is “very happy with the pipeline of clients” that it has lined up for the platform, citing “strong commitment” from large broker, local broker and service provider clients. The platform will have a positive impact on Euronext’s market share, Rivard affirmed, adding that success has already been seen in 9% of volume on Euronext’s credit stocks consisting of dark trading in Q1 2024.
Trading revenue rose by 7.4% YoY in Q1 2024, led by strong increases in fixed income – up 24.5% YoY to €35.2 million – and power trading, up 23.7% to €12.2 million. Cash equity trading revenue was down 1.6%, despite volumes falling 9% over the quarter. “This shows the resilience of our cash trading model in a low volume environment,” said Georgio Modica, chief financial officer, during the results call, “as well as the benefit of the diversification of Euronext trading activity”.
Cash trading fell 1.6% YoY, with ADV down 9.2%. However, this was offset primarily by improved average fees, Modica noted, while order sizes remained high on average.
Lower financial derivatives volumes, with ADV reducing by 12.6% YoY, prompted a 10.2% drop in revenue for derivatives trading over the quarter. Considered on a like-for-like basis at constant currencies, revenue was down by 10.1%.
Fixed income saw a record quarter, up by 34.5% YoY to €35.2 million. “This reflects the strong performances of MTS cash, MTS repo and increased traction of the Euronext fixed income retail franchise,” Modica noted. He added that the franchise has benefited from economic conditions that favoured money markets, sustained sovereign issuance activity and sustained volatility.
Clearing revenue grew by 23.1% to €37 million, and Boujnah stated that the exchange is on track to offer Euronext clearing for all financial and commodity derivatives by Q4 2024.
Non-volume businesses also saw success over the quarter, with advanced data services revenue up 5.5% to €59.4 million, and investor services up 17.4% to €3.4 million, thanks to commercial expansion. Only tech solutions saw a dip YoY, down 3.3% to €26.7 million. This was not necessarily a negative result, the exchange said, as it signalled increased efficacy following the Optiq migration.
In regard to the March announcement that Euronext will be acquiring Global Rate Set Systems, the exchange was asked why they were entering the index space and whether they were planning to compete with others in this market. Anthony Attia, global head of derivatives and post trade, stated that this is a “building block” acquisition to complement the exchange’s existing index offerings.
When asked whether Cboe’s announcement that it will be launching a listing venue by the end of the year, Boujnah stated that “we welcome competition. We have been developing the company in a very competitive environment”.
“25% of the shares in Europe are traded on Euronext, we had close to 50% of IPOs in Europe last year and more than 90% of international listings in Europe. We are in a totally different situation than we were in 5-10 years ago, and we are in a totally different situation from our competitors.”
©Markets Media Europe 2024
