MOEX Reports Q3 2016 Financial Metrics, FX Revenue Down YoY

Derivatives Market was a key area of growth, having been impacted by continued shift towards higher yielding instruments.

Moscow Exchange (MOEX) has reported its financial metrics for Q3 2016 ending September 30, 2016, which were emblematic of lagging results across the board, according to a MOEX statement.

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The Q3 financial release follows on the heels of last week’s volumes report that showed a step back across its derivatives and foreign exchange (FX) business, despite last month’s brief climb, with volumes declining by a margin of -6.2 percent MoM.

MOEX saw a period of weak earnings in Q3 2016, which were fueled by a drop in revenue across a number of its business segments, namely FX and interest income. However, Russia’s largest trading venue revealed that increases in fee and commission income from the Money Market, Fixed Income Market and Depository & Settlement Services partially offset lower income for other segments.

In particular, total operating income in Q3 2016 declined to $168.96 million (RUB 10.784 billion), corresponding to a -3.5 percent YoY drop from $175.01 million (RUB 11.170 billion) in Q3 2015.

Moreover, MOEX’s EBITDA was also down by a factor of 8.1 percentYoY to $131.62 million (RUB 8.399 billion) in Q3 2016, compared to $143.24 million (RUB 9.140 billion) – EBITDA margin was 77.9 percent this quarter, relative to 81.8 percent in Q3 2015.

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Operating expenses also witnessed an uptick, jumping to $46.7 million (RUB 2.980 billion) in Q3 2016 or up 19.8 percent YoY from $39.0 million (RUB 2.488 billion) in the year earlier.

Finally, net profit dropped to $98.59 million (RUB 6.289 billion) in Q3 2016, which reflects a -9.9 percent YoY loss from $109.39 million (RUB 6.977 billion) in Q3 2015.

Key Highlights

Overall, it should be noted that a key area of growth for MOEX during Q3 2016 was garnered from Derivatives Market, having been impacted by continued shift towards trading of higher yielding instruments which offset the decline in trading volumes. The year-on-year growth could also be attributed to commodity futures trading which grew by 245.6 percent YoY, comprising 28.9 percent of total futures trading volumes versus 7.9 percent to in 3Q 2015.

A closer look at MOEX’s foreign exchange business also showed a lower performance. Fee and commission income from the FX market yielded RUB 1.016 billion in Q3 2016, edging lower by 18.6 percent YoY from Q3 2015. Moreover, trading volumes also declined by 16.9 percent on the back of lower volatility of FX rates.

Commenting on the results, Alexander Afanasiev, Chief Executive Officer of Moscow Exchange, said: “Moscow Exchange is continuing to execute successfully on its strategy, improving services, introducing new instruments and attracting new investors to trade on the Russian market. In an environment of sharply lower volatility and reduced investor activity across most emerging markets, Moscow Exchange posted growth in trading volumes on the bond market, money market and in commodity futures.”

“During the quarter we have seen 11 percent growth in total trading volumes and an increase in fee and commission income. As expected, reductions to interest rates have resulted in a normalization of interest income as a share of total income. We are confident that Moscow Exchange has the required infrastructure in place as and when trading volumes and capital raisings on the Russian market accelerate,” he added.

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