NEX Group Q3 revenue up 6% YTD

NEX Group market volumes

NEX Group plc (LON:NXG), a financial technology company at the centre of global markets, announced today its trading statement for the third quarter ended 31 December 2017. Full year results for the year ended 31 March 2018 will be announced on 22 May 2018.

Michael Spencer NEX Group

Michael Spencer

Michael Spencer, Group Chief Executive Officer of NEX, 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. We are meanwhile on track to deliver the expected improvement in NEX Optimisation’s operating margin in the second half of the year and these two factors give us confidence in the outlook for the current year.

Group revenue for the third quarter to 31 December 2017 increased by 3% on a constant currency basis (5% on a reported basis).

NEX Markets revenue decreased by 10% on a constant currency basis (9% on a reported basis) during the third quarter compared to the same period last year as the comparable period included the increased volatility following the US election and the phasing of the CFETS contract revenue recognition. BrokerTec continues to preserve its market share and EBS has shown robust growth in both NDF and CNH volumes.

NEX Optimisation revenue increased by 10% on a constant currency basis (13% on a reported basis) during the third quarter compared to the same period last year. This was underpinned by a strong performance from both the triReduce compression service and the triResolve reconciliation solution which was partly offset by ongoing trading pressure from Reset as the current interest rate environment continues to deliver low short dated interest rate volatility.

The 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.

The United States has enacted a major overhaul of its tax code which includes a reduction in the federal tax rate. Based on preliminary interpretation of the new legislation, NEX’s effective tax rate is expected to fall to 22-24% next year from 26-28% this year. Given the recent increases in market volatility, NEX has disclosed its January NEX Markets volumes, calculated on a 21-day basis below. The full end-of-month volumes calculated on a 22-day basis will be issued on Friday 2 February 2018.

NEX Markets Volumes – January 2018

Average daily volume (in USD billions, single count)
January YoY% change December MoM% change 12 Months ended 31 January % change
2017 2018 2018 2017 2018
US Treasury 178.5 185.2 4% 148.5 21% 165.4 161.3 (2%)
US Repo 213.9 252.0 18% 260.1 (3%) 219.1 232.0 6%
European Repo (in EUR billions) 208.7 244.2 17% 223.1 9% 180.5 228.8 27%
Spot FX 93.2 104.9 13% 65.5 58% 84.8 83.7 (1%)

Volume information includes UST Benchmarks and Agencies. Off-the-Run securities, including T-Bills, are provided pursuant to an agreement with ICAP Securities USA LLC.

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