NO 246 – AUGUST 2013

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WFE Focus
2012 COST AND REVENUE KEY CONCLUSIONS SUMMARY

• For the first time since 2001, total revenues decreased (-10%) to USD 28 bn. All the types of exchanges and all the regions were affected.

•          Trading revenues from both cash and derivative markets declined following the drop in volumes.

Total costs also decreased (-5%) but to a lesser extent.

Profitability then decreased sharply:

•          Net income was down 25% at USD 9 billion

•          Average net profit margin was 32% (against 39% in 2011)

Nevertheless this increase was partly due to exceptional items:

•          EBITDA decrease was less pronounced (-15%) than Net Income.

In 2012, the general environment was very unfavorable for exchanges worldwide:

-  Equity volumes decreased by 22% in USD and by 14% in number of trades;

-  For the first time since 2001, volumes also decreased sharply (-15%) on derivative markets (-19% for equity derivatives and -15% for Interest Rate derivatives)

In that context, trading revenues decreased sharply (-21% for cash markets and -14% for derivatives).

The activity on primary markets was also unfavorable. The total numbers of listed companies decreased by 0.2% and listing revenues were 1% down.

Financial income increased significantly (+15%) as well as revenues from “other services” (+5%). “Other services” include post-trade services for cash markets (+7.8%), market data revenues (+9.5%) and IT sales and services (+3.4%). Nevertheless, it was not sufficient to counterbalance the drop in trading revenues.

Looking only at the total net income for the industry can be quite misleading. The 25% increase was largely driven by exceptional items recorded by two exchanges (CME Group and LSE Group1). Starting from EBITDA and going down to the bottom line provides a more accurate picture of the financial health of the industry: