Euronext sees double digit drop in FX revenue, trading volumes

Euronext, which operates the biggest pan-European exchange, said its fourth-quarter revenues improved to a record €370.1 million, up 60 percent from a year earlier.

The exchange operator attributed the rise to strong performance in listing and post-trade businesses, as well as significant contribution of the Borsa Italiana.

Taking a full-year perspective, Euronext posted €1.3 billion in 2021 revenue, up 47 percent from €884 million in the previous year. Out of this figure, Borsa Italiana Group contributed €337.7 million after eight months of consolidation.

Euronext said the transaction with the Milan-based stock exchange helped diversify its business mix into new asset classes, and strengthened its post-trade activities. In addition, it gave the exchange a clearinghouse for the first time, as well as a securities depository and bond platform.

Trading revenue in 2021 was on the uptick, having increased by 27 percent to €465.3 million on a yearly basis, primarily driven by the consolidation of Borsa Italiana capital markets combined with cash equity volumes.

Post-trade revenue also grew 80 percent to €320.6 million thanks to the strong performance of the clearing activities of its Italian units. In addition, custody and settlement revenue doubled to €219.2 million even though the Nordic CSDs was less dynamic reflecting notably normalised levels of retail activity.

Other business highlights show that non-volume related revenue accounted for 55 percent of the group’s total revenue in Q4 2021, compared to 54 percent in Q4 2020, reflecting a solid quarter for non-volume related business.

FX franchise disappoints

The pan-European exchange posted €752.8 million in 2021 EBITDA, helping it earn a better-than-expected €413 million in profit for the period, which was up 44 and 31 percent, respectively.

On the FX business front, Euronext reported an average daily volume on its spot foreign exchange market at €19.3 billion for the Q4 2021, down 3.1 percent compared to a year ago. For the full year, foreign exchange turnover was reported at €19.9 billion, lower by 10 percent from €21.4 billion in 2020. The spot foreign exchange division yielded €23.5 million in revenues, down 10 percent from 2020, reflecting lower trading volumes as FX markets recorded lower volatility through the year.

Euronext FX franchise disappointed expectations that were already heightened for 2021 after the exchange posted record trading volumes that were more than double the figure it typically generated before the pandemic.

Commenting on the results, Stéphane Boujnah, CEO and Chairman of Euronext, said: “Euronext delivered a record performance during the fourth quarter of 2021, closing a dynamic and pivotal year 2021 for Euronext. In 2021, Euronext achieved more than 40 percent of growth in revenue and EBITDA and a high double-digit increase in adjusted EPS. This results from the successful integration of Euronext Securities Copenhagen and the contribution of the Borsa Italiana Group, especially in fixed income, custody and settlement and clearing. We also consolidated our leadership position in the listing and trading of equities in Europe.”