ICE’s FX, Futures Volumes Plunge in July in Spite of Mounting Volatility

Big money has stayed on the sidelines in July as ICE's volumes fell across the board.

Intercontinental Exchange (NYSE: ICE), a global network of exchanges and clearing houses, has disclosed its trading volumes for July 2017. Despite an uptick in volatility, futures and options volumes incurred a sizable plunge, part of a broader pullback of volumes across the institutional space.

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July 2017 proved highly favorable for markets looking for a catalyst – in this respect the USD happily obliged, falling to multi-year lows vs. several majors. Helped by myriad US scandals – a recurring theme facing the Trump administration – markets abstained from a traditionally sleepy July. That being said, most trading volumes across ICE and other venues did not follow suit, as big money continues to sit on the sidelines.

ICE’s futures and options business, as measured by its average daily volume (ADV), plunged in July to just 4.9 million contracts per day. This was a loss of 30.1 percent month-over-month from 7.1 million contracts per day in June 2017 – having retreated off its highest reading in three years.

This latest figure pared all of last month’s gains in this segment, with July’s reading constituting a new 2017 low. July’s aggregated futures and options volumes were however higher by 11.4 percent from July 2016 over a year-over-year basis. These results are on par with other institutional trading installations worldwide, as many exchanges in the US and UK saw declining volumes relative to the month prior.

Commodities volumes collapse

Despite a recent uptick in commodities volumes leading into the month, ICE registered a decline on a monthly basis, as the exchange reported ADV of 2.8 million contracts per day in July 2017. This was lower by 15.1 percent month-over-month from 3.3 million contracts per day in June 2017. This loss came in spite of a bounce in precious metals prices, with gold reaching a multi-month high and continuing its ascension in parallel to a weakened USD.

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Looking at the group’s equities volumes, ICE’s equity indices ADV during July 2017 collapsed to 301,000 contracts per day, falling 60.2 percent month-over-month from 756,000 contracts per day in June 2017. The reading proved that June 2017 was largely an aberration, with July falling much more in line with a yearly trend at ICE. This segment has been swinging dramatically in 2017, swaying back and forth, marking a new 2017 low in July.

FX ADV sees momentum snapped

Despite strong movement in the USD, ICE’s foreign exchange (FX) and credit volumes during July 2017 were also pointed lower. ADV was recorded at just 26,000 contracts per day – reversing course off of last month en route to a retreat of 27.8 percent from 36,000 contracts per day in June 2017.

Looking ahead, the Fed’s potential monetary action in June could also yield some movement across major financial instruments during the month. In addition, markets will be digesting risk events such as the situation in the UK, with FX markets seeing some plausibility of a shakeup in the UK government.

Quarterly snapshot

Looking at ICE’s Q2 financials, on an adjusted basis, the group reported a net income of $448 million along with a diluted earnings-per-share (EPS) of $0.75 – this was good for a growth of 9.0 percent year-over-year.

ICE Chairman and CEO Jeffrey C. Sprecher, commented: “Our record second quarter performance resulted in our seventeenth consecutive quarter of revenue growth. This was driven by strength in both our data and listings and our trading and clearing segments, demonstrating the ability of our integrated business model to capture opportunities across global markets. We are focused on expanding our comprehensive trading, data and risk management solutions for our customers and creating strong value for shareholders.”

“In the second quarter, we built on our track record of consistent revenue growth, expense discipline and margin expansion. This performance generated strong cash flows which allowed us to return over $700 million to shareholders in the first half of 2017 and has us on track to return around $1.4 billion this year. We are well positioned to achieve our growth objectives in 2017 and are investing to strengthen the foundation for continued growth in the future,” explained Scott A. Hill, ICE CFO.

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