Wednesday, 16 Feb 2011
NYSE Euronext said last week that derivatives revenue climbed by 14 per cent in 2010, while cash equities fell by 10 per cent. By 2013, NYSE Euronext may generate more than 50 per cent of its earnings from options and futures, according to Ed Ditmire, an analyst at Macquarie Group Limited in New York, who has an outperformed rating on the stock.
Derivatives are financial instruments used to hedge risks or speculate. They can be based on an underlying asset such as stocks, bonds, currencies or commodities, or linked to specific events like changes in interest rates.
NYSE Euronext is the largest US equities exchange operator with 26 per cent of volume last month, according to data compiled by London-based Barclays Plc.
In Europe, the combined company’s share of stock trading was more than 27 per cent over the past five days, beating London Stock Exchange Group’s 25 per cent across its venues, according to data compiled by Bats Global Markets, an exchange operator in Kansas City, Missouri.
On the derivatives side, clearly the CME is a big incumbent and being able to compete on scale in the derivatives landscape helps us, Mr. Joseph Mecane, co-head of US listings and cash execution at NYSE Euronext, said in an interview with reporters on February 10.
The merged company will also combine three of the nine US options exchanges to surpass CBOE Holdings Incorporated as the nation’s biggest operator.
The International Securities Exchange is owned by Eurex, which is controlled equally by Deutsche Boerse and SIX Swiss Exchange Limited, while NYSE Euronext operates NYSE Amex Options and NYSE Arca Options.
The three markets handled 43 per cent of US options trades last year, compared with CBOEs 29 per cent, according to Options Clearing Corporation data.