With the major U.S. securities exchanges slated to start releasing their fourth quarter earnings later this week, Moody’s Ratings expects that they’ll be reporting stronger trading and clearing revenues, boosted by surging trading activity in the period.
The big U.S. exchanges — CME Group Inc., Cboe Global Markets Inc., Intercontinental Exchange, Inc. and Nasdaq, Inc. — will begin reporting their fourth quarter results on Jan. 28.
As they do, the rating agency said that it expects the exchanges’ aggregate net transaction and clearing fees will come in higher. In a research note, it forecasts that these revenues will be 8% higher sequentially for the fourth quarter, and 12% higher compared with a year ago.
Moody’s is forecasting stronger revenues for the sector as trading volumes rose in most asset classes in the fourth quarter, on both a quarter-over-quarter and year-over-year basis.
“Renewed tension around global trade and AI prompted bouts of market volatility that contributed to favourable trading volumes,” it said.
In particular, equities and equity derivatives generated record trading volumes in the fourth quarter, Moody’s noted.
“Strong cash equity and equity options trading volumes continue to be a bright spot, increasing to record levels,” it said.
“Cboe and Nasdaq are more concentrated in these products, so their total transaction revenue will likely benefit more from these increases than the transaction revenue of CME or ICE,” the report noted.
Volumes were mixed for various other asset classes, Moody’s said.
For instance, trading in exchange-traded derivatives was stronger, supported by growth in commodities, it said — and volumes in U.S. Treasuries and corporate bonds were stronger on a year-over-year basis in the fourth quarter, but not on a sequential basis.