Electronic trading firm NEX Group PLC (LON: NXG) has reported its results for the first half of Fiscal 2018 (for the six month period to September 30, 2017, fiscal year-end is March 31, 2018), indicating healthy continued Revenue growth in some of the company’s key units, including its Forex ECN unit, EBS.
However profits were down, as the company will be looking to cut costs in the coming months.
Overall at NEX Group:
- Revenue increased by 13% to £287 million (H1 2016/17: £254 million).
- Trading operating profit decreased by 16% to £63 million (H1 2016/17: £75 million).
At EBS, a global institutional electronic platform for the FX markets, Revenue increased by 12% to £75 million (H1 2016/17: £67 million), as average daily volume increased by 7% to $84 billion. Revenue growth was underpinned by emerging markets currency pairs, while revenue trends in G10 currency pairs were mixed.
EBS Market, the exchange-like central limit order book, remains the benchmark for the professional FX trading community. It has maintained its position as a primary interbank venue for the trading of the world’s most actively traded currency pairs, including euro/dollar and dollar/yen. The recently launched EBS Live Ultra service has helped augment EBS Market’s market share. It provides clients with faster market data at 5 milliseconds (previously 100 milliseconds) in exchange for meeting certain market-maker criteria.
During the period EBS Market continued to develop and create liquidity in non-deliverable forwards (NDFs) with average daily volume growing by more than 25% compared with the prior period. This was partly driven by the addition of non-bank participants to the NDF product offering. Volumes grew across most NDF pairs in particular dollar/won and dollar/rupee.
NEX Markets continues to innovate. In September, it launched NEX Quant Analytics, the FX market’s most comprehensive community-based analytics tool for clients trading on the EBS platform. Using benchmark data taken from the entire EBS ecosystem, the analytics service delivers real and measurable insight for clients into their own trading activities and the ability to look at their performance versus that of their peers.
EBS Direct is a platform that allows liquidity providers to stream tailored prices directly to liquidity consumers. Interest in the platform continues to grow and the platform has more than 50 liquidity providers and 400 liquidity consumers using the service. The EBS Direct platform had a 5% increase in average daily volume over the prior period to $21 billion. FX forwards continue to grow with a 177% increase in average daily volume to $9 billion over the prior period.
EBS eFix, the matching service that enables customers to execute Fix interest electronically on the EBS Market platform has continued to deliver significant growth. Average daily volume has increased by more than 20% over the comparable period to more than $2 billion matched per day.
Michael Spencer, NEX Group
Michael Spencer, Group Chief Executive Officer, said:
Now more than ever before we’re focused on execution and delivering growth in revenue and earnings. Nevertheless, when necessary, we’ll invest to ensure that NEX is best positioned to take advantage of the significant opportunities ahead of us, as we recently did in NEX Optimisation. The combination of our agile organisation, market leading products, investment in innovation and our experienced management team, will lead us to further success.
We have identified a further £15 million of annualised cost savings in addition to the £25 million previously announced. Since the acquisition of Abide in October 2016, the rebranded Regulatory Reporting business has signed more than 300 new contracts and is on track to profitability. In NEX Markets, BrokerTec continues to win market share and EBS trading volumes in Asian currency pairs have reached new peaks.
Despite market conditions remaining challenging, we see many opportunities ahead. We have a diverse global business, an expanding client base and a robust balance sheet. This is a transitional and transformational year for NEX and we are committed to our financial aspirations of achieving compound annual revenue growth of 7%-10% and operating margins for NEX Optimisation and NEX Markets of more than 40% by FY 2019/20.
NEX Group’s full release on 1H results can be seen here.