We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Securities & Exchanges Stocks to Watch Amid Industry Headwinds
Read MoreHide Full Article
A diversified product portfolio and expanding revenue streams continue to support growth for players in the Zacks Securities and Exchanges industry. Higher trading volumes, strategic acquisitions, product innovation and growing adoption of cryptocurrencies are expected to benefit S&P Global (SPGI - Free Report) , CME Group (CME - Free Report) , Intercontinental Exchange (ICE - Free Report) , Nasdaq Inc. (NDAQ - Free Report) and Cboe Global Markets (CBOE - Free Report) . Increasing emphasis on non-trading revenues, including market technology, listings and information services, is strengthening business diversification and providing more stable income streams. Rising retail investor participation also presents growth opportunities. However, shifting investment preferences, evolving regulatory requirements and heightened cybersecurity threats remain key challenges amid the rapid digitization of financial markets.
Meanwhile, mergers, acquisitions and strategic alliances are reshaping the competitive landscape. Industry participants are pursuing consolidation to expand market reach, enhance technological capabilities, diversify offerings and strengthen competitive positioning. According to Deloitte, exchanges are increasingly turning to consolidation to navigate evolving technological, regulatory and competitive dynamics, supporting long-term innovation and operational efficiency.
About the Industry
The Zacks Securities and Exchanges industry includes companies operating electronic marketplaces that enable trading in stocks, options, bonds and commodity contracts across multiple asset classes and geographies. These companies earn revenues from trading activities and fees charged to listed entities. They also offer a broad range of data, analytics and listing services to global financial and commodity markets. Their offerings include pricing and reference data, market data feeds, index services, investment and risk management solutions, desktop platforms, connectivity services, and corporate and ETF listings on cash equity exchanges. The growing adoption of crypto assets is creating additional growth opportunities for industry participants. However, stringent regulatory requirements and evolving compliance standards continue to pose operational challenges.
4 Trends Shaping the Future of the Securities and Exchanges Industry
Market Volatility Boosts Trading Activity: Industry players generate revenues primarily from trade execution, clearing, settlement, listings and trading technology. Heightened market volatility generally boosts trading volumes and transaction-based revenues. Increasing cryptocurrency adoption and a potentially favorable regulatory environment could further support trading activity. Exchanges are also expanding into tokenization, stablecoins and digital payments, bridging traditional financial markets with blockchain technology. Meanwhile, rising derivatives trading and growing demand for exchange-traded funds (ETFs), particularly index-linked products, provide additional growth opportunities. Technavio projects the global securities exchanges market to reach $49.6 billion by 2028, registering a 12.1% CAGR. However, lower volatility could dampen trading volumes and transaction revenues.
Intense Competition: Traditional exchanges face growing competition from alternative trading systems, off-exchange market makers, newly launched exchanges and digital-asset platforms. These rivals compete aggressively through lower fees, liquidity incentives, faster execution and specialized products. As trading activity spreads across more venues, liquidity fragmentation can reduce the market share and pricing power of established exchanges while increasing the cost and complexity of maintaining competitive technology and connectivity.
Diversification Into Other Recurring Revenue Sources: Securities exchanges are increasingly prioritizing recurring revenue streams to reduce dependence on volatile trading activity and improve earnings stability. Subscription-based market data, listings, clearing, technology platforms and risk management solutions provide predictable cash flows and support sustainable growth. Rising demand for market intelligence, regulatory compliance, ESG solutions and digital asset infrastructure is creating additional revenue opportunities. Industry participants are expanding their non-trading businesses to strengthen operational scalability, enhance margins and diversify their revenue mix. Greater emphasis on monetizing proprietary market data through feeds, analytics and subscription services is further reinforcing business resilience and supporting long-term profitability.
Continuous Investment in Technology, AI in Particular: Industry players are intensifying technology investments to enhance competitiveness and adaptability. There is growing emphasis on creating strategic market models through advanced tools, especially AI, while continually upgrading products and services. Exchanges are increasingly leveraging AI and blockchain to strengthen efficiency and resilience. Recent advancements use machine learning, automation and algorithms to improve trading accuracy, reduce cyber threats and limit human errors, thereby accelerating trading speed. Moreover, industry players are focusing on automating non-trading operations, which significantly contribute to revenue generation and support sustainable long-term growth.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Securities and Exchanges industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #166, which places it in the bottom 33% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, reflects dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have been losing confidence in this group’s earnings growth potential. Estimates for 2026 have decreased 3% since this June.
Before we present a few securities and exchanges stocks worth considering for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector and S&P 500
The Zacks Securities and Exchanges industry has underperformed the broader Zacks Finance sector as well as the Zacks S&P 500 composite year to date.
The industry has lost 9% against the broader sector’s increase of 3.3% and the Zacks S&P 500 composite’s rise of 7.9% in the said time frame.
Year-to-Date Price Performance
Industry's Current Valuation
On the basis of trailing 12-month price-to-earnings (P/E), which is commonly used for valuing exchange stocks, the industry is currently trading at 20.27X compared with the S&P 500’s 18X and the sector’s 16.03X.
Over the last five years, the industry has traded as high as 29.62X, as low as 17.59X and at the median of 23.94X, as the chart below shows.
12-Month Forward Price-to-Earnings (P/E) Ratio
12-Month Forward Price-to-Earnings (P/E) Ratio
5 Securities and Exchanges Stocks to Keep An Eye On
Nasdaq: Headquartered in New York, Nasdaq is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services. Its strategy of accelerating its non-trading revenue base, successfully maximizing opportunities as a technology and analytics provider, growing core marketplace businesses and intensifying its focus on Market Technology and Information Services businesses should continue to drive Nasdaq.
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 18.7% and 13.4%, respectively, year over year. NDAQ came up with a four-quarter average earnings surprise of 5.67%. The expected long-term earnings growth rate is pegged at 13.6%, better than the industry average of 12.1%.
Price and Consensus: NDAQ
Cboe Global Markets: Based in Chicago, IL, Cboe Global is one of the largest stock exchange operators by volume in the United States and globally for ETP trading. This company is poised for growth, given its expanding product line across asset classes, broadening geographic reach and a diversifying business mix with recurring revenues and technology.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 30.4% and 6%, respectively. The expected long-term earnings growth rate is pegged at 15.9%, better than the industry average. The consensus mark for 2026 and 2027 earnings has moved 0.3% and 0.5% north, respectively, in the past 30 days. It came up with a four-quarter average earnings surprise of nearly 5.35%.
Price and Consensus: CBOE
CME Group: Headquartered in Chicago, IL, CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. Its efforts to expand future products in emerging markets, non-transaction-related opportunities, OTC offerings, cross-selling through alliances, global presence and liquidity should drive growth.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 9.7% and 4.7%, respectively. It came up with a four-quarter average earnings surprise of 1.27%. The expected long-term earnings growth rate is pegged at 6.2%. The consensus mark for 2026 and 2027 earnings has moved 2 cents and 5 cents north, respectively, in the past 30 days.
Price and Consensus: CME
Intercontinental Exchange: This Atlanta, GA-based company is a leading global operator of regulated exchanges, clearing houses and listings venues and a provider of data services for commodity, financial, fixed-income and equity markets. Its compelling portfolio, expansive risk-management services, strategic buyouts and a solid balance sheet bode well. It is the second-largest global fixed-income provider. This company, with the largest mortgage network across the United States, remains well-positioned to benefit from accelerated digitization in the U.S. residential mortgage industry.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 17.8% and 8.9%, respectively. It came up with a four-quarter average earnings surprise of 3.44%. The expected long-term earnings growth rate is pegged at 12.9%.
Price and Consensus: ICE
S&P Global: Headquartered in New York, S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. Recurring benchmark revenues, rising AI adoption and targeted acquisitions support long-term growth, while the Mobility spin has sharpened the portfolio. Productivity gains are improving margins and buybacks and dividends support per-share returns.
The Zacks Consensus Estimate for the company’s 2026 EPS indicates a year-over-year decrease of 0.6%, while that for 2027 indicates a year-over-year increase of 12.8%. It came up with a four-quarter average earnings surprise of 4.43%. The expected long-term earnings growth rate is pegged at 11.6%.
View the Zacks #1 Rank List
Image: Bigstock
5 Securities & Exchanges Stocks to Watch Amid Industry Headwinds
A diversified product portfolio and expanding revenue streams continue to support growth for players in the Zacks Securities and Exchanges industry. Higher trading volumes, strategic acquisitions, product innovation and growing adoption of cryptocurrencies are expected to benefit S&P Global (SPGI - Free Report) , CME Group (CME - Free Report) , Intercontinental Exchange (ICE - Free Report) , Nasdaq Inc. (NDAQ - Free Report) and Cboe Global Markets (CBOE - Free Report) . Increasing emphasis on non-trading revenues, including market technology, listings and information services, is strengthening business diversification and providing more stable income streams. Rising retail investor participation also presents growth opportunities. However, shifting investment preferences, evolving regulatory requirements and heightened cybersecurity threats remain key challenges amid the rapid digitization of financial markets.
Meanwhile, mergers, acquisitions and strategic alliances are reshaping the competitive landscape. Industry participants are pursuing consolidation to expand market reach, enhance technological capabilities, diversify offerings and strengthen competitive positioning. According to Deloitte, exchanges are increasingly turning to consolidation to navigate evolving technological, regulatory and competitive dynamics, supporting long-term innovation and operational efficiency.
About the Industry
The Zacks Securities and Exchanges industry includes companies operating electronic marketplaces that enable trading in stocks, options, bonds and commodity contracts across multiple asset classes and geographies. These companies earn revenues from trading activities and fees charged to listed entities. They also offer a broad range of data, analytics and listing services to global financial and commodity markets. Their offerings include pricing and reference data, market data feeds, index services, investment and risk management solutions, desktop platforms, connectivity services, and corporate and ETF listings on cash equity exchanges. The growing adoption of crypto assets is creating additional growth opportunities for industry participants. However, stringent regulatory requirements and evolving compliance standards continue to pose operational challenges.
4 Trends Shaping the Future of the Securities and Exchanges Industry
Market Volatility Boosts Trading Activity: Industry players generate revenues primarily from trade execution, clearing, settlement, listings and trading technology. Heightened market volatility generally boosts trading volumes and transaction-based revenues. Increasing cryptocurrency adoption and a potentially favorable regulatory environment could further support trading activity. Exchanges are also expanding into tokenization, stablecoins and digital payments, bridging traditional financial markets with blockchain technology. Meanwhile, rising derivatives trading and growing demand for exchange-traded funds (ETFs), particularly index-linked products, provide additional growth opportunities. Technavio projects the global securities exchanges market to reach $49.6 billion by 2028, registering a 12.1% CAGR. However, lower volatility could dampen trading volumes and transaction revenues.
Intense Competition: Traditional exchanges face growing competition from alternative trading systems, off-exchange market makers, newly launched exchanges and digital-asset platforms. These rivals compete aggressively through lower fees, liquidity incentives, faster execution and specialized products. As trading activity spreads across more venues, liquidity fragmentation can reduce the market share and pricing power of established exchanges while increasing the cost and complexity of maintaining competitive technology and connectivity.
Diversification Into Other Recurring Revenue Sources: Securities exchanges are increasingly prioritizing recurring revenue streams to reduce dependence on volatile trading activity and improve earnings stability. Subscription-based market data, listings, clearing, technology platforms and risk management solutions provide predictable cash flows and support sustainable growth. Rising demand for market intelligence, regulatory compliance, ESG solutions and digital asset infrastructure is creating additional revenue opportunities. Industry participants are expanding their non-trading businesses to strengthen operational scalability, enhance margins and diversify their revenue mix. Greater emphasis on monetizing proprietary market data through feeds, analytics and subscription services is further reinforcing business resilience and supporting long-term profitability.
Continuous Investment in Technology, AI in Particular: Industry players are intensifying technology investments to enhance competitiveness and adaptability. There is growing emphasis on creating strategic market models through advanced tools, especially AI, while continually upgrading products and services. Exchanges are increasingly leveraging AI and blockchain to strengthen efficiency and resilience. Recent advancements use machine learning, automation and algorithms to improve trading accuracy, reduce cyber threats and limit human errors, thereby accelerating trading speed. Moreover, industry players are focusing on automating non-trading operations, which significantly contribute to revenue generation and support sustainable long-term growth.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Securities and Exchanges industry is housed within the broader Zacks Finance sector. It carries a Zacks Industry Rank #166, which places it in the bottom 33% of the 247 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, reflects dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts have been losing confidence in this group’s earnings growth potential. Estimates for 2026 have decreased 3% since this June.
Before we present a few securities and exchanges stocks worth considering for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms Sector and S&P 500
The Zacks Securities and Exchanges industry has underperformed the broader Zacks Finance sector as well as the Zacks S&P 500 composite year to date.
The industry has lost 9% against the broader sector’s increase of 3.3% and the Zacks S&P 500 composite’s rise of 7.9% in the said time frame.
Year-to-Date Price Performance
.jpg)
Industry's Current Valuation
On the basis of trailing 12-month price-to-earnings (P/E), which is commonly used for valuing exchange stocks, the industry is currently trading at 20.27X compared with the S&P 500’s 18X and the sector’s 16.03X.
Over the last five years, the industry has traded as high as 29.62X, as low as 17.59X and at the median of 23.94X, as the chart below shows.
12-Month Forward Price-to-Earnings (P/E) Ratio
12-Month Forward Price-to-Earnings (P/E) Ratio
.jpg)
5 Securities and Exchanges Stocks to Keep An Eye On
We are presenting five Zacks Rank #3 (Hold) stocks from the Securities and Exchanges industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nasdaq: Headquartered in New York, Nasdaq is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information, and public and private company services. Its strategy of accelerating its non-trading revenue base, successfully maximizing opportunities as a technology and analytics provider, growing core marketplace businesses and intensifying its focus on Market Technology and Information Services businesses should continue to drive Nasdaq.
The Zacks Consensus Estimate for 2026 and 2027 earnings per share indicates an increase of 18.7% and 13.4%, respectively, year over year. NDAQ came up with a four-quarter average earnings surprise of 5.67%. The expected long-term earnings growth rate is pegged at 13.6%, better than the industry average of 12.1%.
Price and Consensus: NDAQ
Cboe Global Markets: Based in Chicago, IL, Cboe Global is one of the largest stock exchange operators by volume in the United States and globally for ETP trading. This company is poised for growth, given its expanding product line across asset classes, broadening geographic reach and a diversifying business mix with recurring revenues and technology.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 30.4% and 6%, respectively. The expected long-term earnings growth rate is pegged at 15.9%, better than the industry average. The consensus mark for 2026 and 2027 earnings has moved 0.3% and 0.5% north, respectively, in the past 30 days. It came up with a four-quarter average earnings surprise of nearly 5.35%.
Price and Consensus: CBOE
CME Group: Headquartered in Chicago, IL, CME Group is the largest futures exchange in the world in terms of trading volume as well as notional value traded. Its efforts to expand future products in emerging markets, non-transaction-related opportunities, OTC offerings, cross-selling through alliances, global presence and liquidity should drive growth.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 9.7% and 4.7%, respectively. It came up with a four-quarter average earnings surprise of 1.27%. The expected long-term earnings growth rate is pegged at 6.2%. The consensus mark for 2026 and 2027 earnings has moved 2 cents and 5 cents north, respectively, in the past 30 days.
Price and Consensus: CME
Intercontinental Exchange: This Atlanta, GA-based company is a leading global operator of regulated exchanges, clearing houses and listings venues and a provider of data services for commodity, financial, fixed-income and equity markets. Its compelling portfolio, expansive risk-management services, strategic buyouts and a solid balance sheet bode well. It is the second-largest global fixed-income provider. This company, with the largest mortgage network across the United States, remains well-positioned to benefit from accelerated digitization in the U.S. residential mortgage industry.
The Zacks Consensus Estimate for the company’s 2026 and 2027 EPS indicates a year-over-year increase of 17.8% and 8.9%, respectively. It came up with a four-quarter average earnings surprise of 3.44%. The expected long-term earnings growth rate is pegged at 12.9%.
Price and Consensus: ICE
S&P Global: Headquartered in New York, S&P Global is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. Recurring benchmark revenues, rising AI adoption and targeted acquisitions support long-term growth, while the Mobility spin has sharpened the portfolio. Productivity gains are improving margins and buybacks and dividends support per-share returns.
The Zacks Consensus Estimate for the company’s 2026 EPS indicates a year-over-year decrease of 0.6%, while that for 2027 indicates a year-over-year increase of 12.8%. It came up with a four-quarter average earnings surprise of 4.43%. The expected long-term earnings growth rate is pegged at 11.6%.
Price and Consensus: SPGI
.jpg)