Nasdaq’s Strong Position In Options Market Should Boost Q3 Earnings

by Trefis Team
Nasdaq OMX Group
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NASDAQ‘s (NASDAQ:NDAQ) strong growth in equity options trading volumes continued in Q3, with around 364 million contracts traded in the U.S. market, about 5% more than the prior year Q3 trading volumes and overall U.S. equity options volumes (+2%). This was primarily due to a substantial gain in market share to over 41%, driven by the acquisition of ISE in 2016. Moreover, we believe the strengthening of the U.S. dollar and other macro factors contributed to increased volatility in the market, and consequently drove trading volumes.

NASDAQ generates around 18% of its revenues from this asset class. With around 5% growth in volumes, we expect significant top line growth from this segment.

After a slight improvement in the previous quarter, NASDAQ’s cash equity trading volumes remained under pressure in Q3, with around 69.1 billion shares traded in the U.S. market, in comparison to previous quarter’s 79.3 billion shares. The volumes were lower in comparison to the previous year’s comparable quarter, despite an increase in market share by 130 basis points to 18.1%. We attribute that to the decline in the overall U.S. cash equity market.  This will partially offset the revenue growth from the rise in the equity options volumes.

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