Choppy markets likely to boost profit for U.S. exchange operators

Oct 18, 2022

By Manya Saini

(Reuters) – Heightened market volatility could prove to be a boon for U.S. exchange operators as higher trading volumes during their third quarter help offset a hit from fewer stock listings so far this year.

Nasdaq Inc will kick off the reporting season for the operators on Wednesday for the three months during which the Cboe Volatility Index, known as “Wall Street’s fear gauge”, had touched a more than three-month high.

“Counter-cyclical nature of exchange business models reduces their downside risk during market turmoil relative to peer financial sector companies and the broader market,” said Gautam Sawant, CFA, Credit Suisse.

“Exchanges remain well-positioned to grow earnings into 2023.”


Decades-high inflation, the Ukraine war and a rapid rise in interest rates have dried up the market for initial public offerings, but has led investors to hedge their risks, which is expected to boost trading volumes and revenue for exchange operators.

They are also expected to benefit from a foray into the technology space, analysts said. Besides the mainstay trading business, exchange operators offer a suite of tools for investors.

New York Stock Exchange-owner Intercontinental Exchange Inc provides mortgage servicing through Ellie Mae, while rival Nasdaq Inc offers indexes and analytics.

“They are highly diverse businesses,” Andrew Bond, managing director, Rosenblatt Securities told Reuters. (Graphic: U.S. exchanges stock performance YTD,


Company Refinitiv revenue Refinitiv

estimate EPS


Nasdaq Inc $885.96 mln (up 5.7% 65 cents


Intercontinental $1.81 bln (up marginally $1.27

Exchange y-o-y)

CME Group Inc $1.22 bln (up 3.4% y-o-y) $1.94

Cboe Global Markets $436.16 mln (up 17.9% $1.63

Inc y-o-y


** Nasdaq Inc – 12 of 18 brokerages rate the stock “buy” or higher, 4 “hold” and 2 “sell”; their median PT is $64

** Intercontinental Exchange – 12 of 17 brokerages rate the stock “buy” or higher, 5 “hold”; their median PT is $122

** CME Group Inc – 10 of 20 brokerages rate the stock “buy” or higher, 8 “hold” and 2 “sell”; their median PT is $209.50

** Cboe Global Markets Inc – 8 of 16 brokerages rate the stock “buy” or higher, 7 “hold” and 1 “sell”; their median PT is $137

(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)


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