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Cboe Global (CBOE) June ADV Rises, Global FX Matched Solid

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Cboe Global Markets, Inc. (CBOE - Free Report) reported average daily volume (ADV) of nearly 7.3 million for June 2018. The company witnessed an improvement in its June ADV, which inched up 1.6% year over year.

Total contracts for the month were 153.8 million, slipping 3% year over year. Of this, options contracts declined 2.3% year over year to 148.2 million while futures contracts fell 17.8% to 5.7 million from the year-ago tally. While Options ADV was 7.1 million, Futures’ was 0.3 million.

Subsequently, ADV of the U.S. Equities Matched came in at 1.3 million shares last month, down 7.2% year over year whereas the European Equities Matched increased 9.5% year over year to €10.9 billion. The Global FX Matched improved 35.4% to nearly $37.8 billion.

Though the June volumes were down compared with the year-ago level, the company witnessed a year-over-year ADV increasing year over year. Rise in trading volumes should consistently drive transaction fees (accounting for 70% of total operating revenues in 2017). As a result, the company has kept the revenue growth momentum up for the past several years.

We believe, the company will retain this positive trend in the coming quarters, backed by a strong market position, global reach, prudent acquisitions and a robust portfolio of proprietary products.

With respect to revenue per contract (RPC), the company estimates average RPC for Options for second-quarter 2018 to be in line with 24.2 cents reported for the two months ended May 31, 2018. For Futures, the company projects RPC between 3% and 4%, higher than $1.503 reported for the two months ended May 31, 2018. This estimate represents a shift in the mix of trading volume in June.

Shares of Cboe Global Markets have lost 17.4% year to date against the industry’s increase of 4.8%. Nonetheless, we expect market volatility lending momentum to trading volumes, a diversified product portfolio as well as benefits derived from Bats Global acquisition to help the stock turn around in the near term.

Cboe Global Markets carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recently, the securities exchanges namely, CME Group Inc. (CME - Free Report) , Intercontinental Exchange, Inc. (ICE - Free Report) and MarketAxess Holdings Ltd. (MKTX - Free Report) also reported June volumes, respectively. While CME Group’s ADV of 18.4 million contracts per day improved 12% year over year, MarketAxess posted a trading volume of $147.8 billion. Plus, Intercontinental Exchange’s contracts per day averaged at 6.3 million, down 11% year over year.

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