London-headquartered commodities broker Marex posted record revenues in the first half of 2022 as strategic investment across its global franchise has positioned the business to outperform in favourable market conditions.
The commodities boom has fueled stellar results for the market making and execution segment, and also boosted volumes for the clearing business. Clients’ activity at Marex, which connect its traders to commodity, energy and financial markets, has surged even more since Russia’s invasion of Ukraine.
Although that pressures the broker to maintain higher cash reserves, clients’ monies leapt to $7 billion by 30 June 2022, up 29 percent from a year earlier.
Marex said net revenue were up by a third YoY coming in at $334 million due to “supportive market backdrop” with increased volatility. Pretax profit in H1 2022 rose 70 percent from the previous year to $60 million, compared to $79.6 million in the whole 2021, reflecting organic growth and higher interest income.
Rising energy and commodity prices lifted performance in the first quarter with economies reopening after pandemic lockdowns, but market conditions normalised in the second quarter amid higher interest rates, the broker notes.
Other business highlights show that Market Making revenues increased 84 percent to $101 million from $55 million in 2021. CSC, the energy market making business acquired in 2019, continues to perform well, benefiting from positive market conditions as well as investments made to expand product coverage.
In terms of its Execution and Clearing business, where Marex acts as principal for clients, providing direct access to 56 exchanges, revenues were up 36 percent to $117 million from $86 million in 2021.
Ian Lowitt, Marex CEO, commented: “I am extremely pleased to report another record half year result, which demonstrates the earnings power of our franchise against the strong comparative periods of 2021 and 2020, which benefited from Covid-related volatility. The acquisition of ED&F Man Capital Markets will represent a significant milestone for the firm, transforming our scale and Marex’s reach across products and geographies. These are exciting times for Marex as we continue to realise our ambitions and execute our strategic plan.”
Earlier this month, Marex has agreed to buy rival ED&F Man Capital Markets to boost its metals business and expand in fixed income and equities. The firm is also in advanced stages of negotiations for acquiring OTCex Group’s voice brokerage activities.
Marex said these deals represent a superb opportunity of corporate backing and consolidation with a worldwide growing leading player. It should therefore pave the way for future ambitious business development steps by benefiting from access to Marex’s global infrastructure and balance sheet.