NYSE Euronext underlined the importance of its derivatives and technology businesses over traditional cash equity trading via revealing its operating margins for NYSE Liffe for the first time.
The figure is much higher than the margins normally generated by exchanges from the business of cash equities trading. It indicates how acquiring or growing derivatives businesses has been key to the stock exchanges because they’ve become multi-asset business.
The changing business focus of the NYSE reflects a dramatic change in the way equities are traded. The growth of high-frequency trading, which is often driven by the computer programs that spot tiny moves in prices and quicckly move in to take advantage of these moves, has made the technology services more important in the recent years than ever before.
The regulators have stepped up scrutiny of the US equity markets in the light of the shifts, amid the concerns that high-frequency traders could have advantages over retail investors and other without access to similar levels of technology.
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