Mixed News for FX in LSEG H1 Results
Posted by Colin Lambert. Last updated: August 4, 2023
London Stock Exchange Group (LSEG) has reported increased revenues, but lower profits for the first half of 2022, within which it has delivered an upbeat assessment of its FX business, which also saw a slight decline.
The exchange group says revenues excluding recoveries were GBP 3.99 billion, a 7.9% increase at constant currency rates. Operating profit fell to GBP 720 million, from GBP 897 million in H1 2022, an 18.7% decline. Within this, Data & Analytics revenues were up 7.6% at GBP 2,626, Capital Markets +1.5% to GBP 759 million, post trade up 19.2% to GBP 590 million.
FX revenues fell by 1.9% at constant currency to GBP 128 million, however LSEG says its Matching spot FX platform delivered “positive growth supported by last year’s change in commercial incentives, reversing a multi-year period of decline”.
This increase was offset by reduced activity on FXall, the firm says lower transactional activity across many asset classes fed through to reduced demand for FX services.
Looking ahead, LSEG says it expects the migration of Matching to its own technology, together with other enhancements, will improve speed on the platform by a factor of 10, adding “we expect the first new functionality to be launched in H2”.
Additionally, LSEG says its Singapore-based NDF venue is expected to go live in H2 2023.
Elsewhere in the FX business, LSEG reports ForexClear saw slightly lower notional values cleared at $12,463 billion, this is 1.9% lower than the same period in 2022 – the service added one new member in H1 2023 to bring its membership to 37 institutions.
There was good news for the firm’s fixed income business with Tradeweb seeing record transaction volumes and revenues in the first half with continued market share gains across overall US credit and global swaps. Activity in the period skewed towards shorter-duration instruments and asset classes where Tradeweb earns lower fees, LSEG says, leading to revenue growth below that of volumes.
“Capital markets had a more modest rate of growth than in previous periods as subdued market volatility and investor risk aversion weighed on transaction volumes and mix across most asset classes,” the firm says in its release. “The structural drivers of growth across our Capital Markets businesses remain robust, particularly the trend for greater electronic trading across FX, fixed income and interest rate products.”
LSEG says that rollout of its Workspace platform continues with 130 updates going live in the first half, it also intends to cease support for Eikon, the predecessor to Workspace, in 2025. Also, from the end of August LSEG will retire the Refinitiv brand across the group.