The massive spike in FX volatility in the first month of 2018 has prompted NEX Group to post an upbeat guidance for the year. The company’s CEO Michael Spencer explicitly mentioned foreign exchange as a key driver but cautioned about the lack of clarity whether the multi-year trend of low FX vol has finally come to an end.
The company published a trading statement today, outlining key growth metrics for the firm in the third quarter of its fiscal year that ended on the 31st of December 2018. The company will be posting its full-year results on the 22nd of May 2018.
Shares of NEX Group spiked higher by 8 percent after the report and the upbeat comments from the CEO of the company, Michael Spencer. He outlined that the company is on track to deliver an expected improvement in the operating margin of NEX Optimisation in the second half of the year.
Key Performance Indicators
The revenue of NEX Group increased by 3 percent year-on-year in the third quarter of fiscal 2018. Throughout the final three months of the calendar year, the revenues of NEX Markets decreased by 10 percent as the base effects from the US presidential election in 2016 played a role.
BrokerTec, which is the company’s fixed income trading platform, continues to preserve its market share, while EBS has shown robust growth in both NDF and CNH volumes.
The revenues of the NEX Optimisation unit increased by 10 percent which was driven by wider adoption of the company’s triReduce compression service and the triResolve reconciliation product.
The firm’s MiFID II regulatory reporting solution went live on 3 January with more than 380 new contracts, with an annualised revenue value of more than £10 million. In addition, US tax cuts are yielding an effective tax rate reduction to 22-24% next year from 26-28% this year.
Investors have reacted positively to the results and the outlook comments from the company’s CEO.
Commenting on the evolution of factors driving key metrics at NEX, Michael Spencer, said: “Market volatility was low during the quarter in contrast with last year when volumes picked up in the aftermath of the US presidential election. Nevertheless we are making headway with our transformation programme as we continue to reshape NEX for tomorrow’s financial markets and reduce costs.”
“Since the beginning of January, our markets have been noticeably more active as FX volatility has increased from historic lows. However, it is still too early to assume with any confidence that the previous and prolonged period of subdued market conditions has come to an end,” he elaborated.