NEX Markets Revenues Climb 11% on Fixed Income Trading

Low foreign exchange volatility contributed to a decline in trading volumes via EBS.

London-headquartered broker-dealer NEX Group has published the results of the company’s first quarter in a trading update. Data shows that NEX Group’s revenues increased 10 percent on a consistent currency basis for the period between the 1st of April and the 30th of June. The company is well on its way with its NEX Transformation program.

The NEX Markets segment, which includes the company’s foreign exchange electronic communications network (ECN) EBS, registered growth in revenues due to increased bonds trading. The news comes as foreign exchange volatility in the first half of 2017 has been disappointing at best.

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Revenues at NEX Markets increased by 11 percent when compared to a year ago (on a constant currency basis). The company’s fixed income trading platform BrokerTec registered an increase of 7 percent to $168 billion daily in US Treasuries. The average daily volumes in US and EU repos increased by 6 percent and 27 percent respectively when compared to the same period last year.

FX Trading Slower than 2016 Brexit Quarter

EBS was much more subdued save for some activity around the French elections, the UK referendum and some Federal Reserve moves. FX volatility was subdued, especially in G3 currency pairs.

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Average daily volume on EBS decreased by 3 percent to $80 billion. EBS Direct, that allows liquidity providers to stream tailored prices directly to customers, was flat at $21 billion in Q1.

NEX Group’s new product, EBS Live Ultra, which is the company’s fastest FX product, has been reported to have significantly improved price discovery, the company stated.

Looking at year-on-year comparisons, we have to take into account that Brexit was a huge market moving event last year, causing record high trading volumes across the FX industry. The lack of an event of similar magnitude is affecting the base numbers significantly.

Commenting on the company’s results, the CEO of NEX Group, Michael Spencer, said: “We have made good progress towards our medium term aspirations, which will deliver value for our clients and shareholders: a group revenue CAGR of 7-10%, an increase in NEX’s subscription based products, drive profitable growth, and create efficiencies to increase divisional operating margins to at least 40%.”

“Despite ongoing low volatility and a flat yield curve, financial markets have started the long and slow journey to more normalized conditions with further interest rate rises in the US and early signs of improved economic conditions in Europe,” Spencer elaborated.

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