Securities Lending Times | Deutsche Boerse outlines predicted earnings from Reporting Hub sale

Deutsche Boerse is expecting net revenue in the range of “low to medium double-digit million euro” from the sale of its Regulatory Reporting Hub to MarketAxess later this year.

The Regulatory Reporting Hub is a pan-European reporting and compliance platform that enables buy- and sell-side clients to meet their regulatory obligations and transparency requirements across multiple regulations, such as the second Markets in Financial Instruments Directive and the European Markets Infrastructure Regulation.

The sale was initiated in September and is set to be completed this quarter, with the German exchange group marking earnings against 2020 and 2021.

The hub’s sale will help offset the 4 percent year-on-year (YoY) decrease in Deutsche Boerse’s net revenue for Q3, which amounted to €707.5 million, down from €733.8 million in the comparable period last year.

Contributing to overall earnings, Clearstream (post-trading), which now includes the former Global Securities Financing (collateral management) segment, recorded net revenue of €191.2 million in Q3, down 8 percent from €208.4 million in Q3 2019.

However, revenue from the first nine months of the year increased 1 percent YoY to €639.5 million.

Of this, revenue from collateral management accounted for €18.3 million in Q3, down 5 percent YoY, and €58.2 million from January to 30 September, up from €58 million over the same period in 2019.

Meanwhile, Eurex saw Q3 net revenue from equity derivatives trading through its platform decrease by 18 percent YoY to €8.3 million, while net revenue from over-the-counter derivatives activity increased 34 percent YoY to €13.4 million.

Deutsche Boerse’s latest report elsewhere reveals that Eurex set to be the ultimate beneficiary the exchange’s acquisition of a majority stake in Quantitative Brokers, a New York-based independent provider of advanced execution algorithms and data-driven analytics for global futures, options, and interest rate markets.

Both parties expect to finalise the transaction by the end of this year, at which point the globally active financial technology company will be allocated to Eurex.

Commenting on the Q3 results, Deutsche Boerse’s chief financial officer Gregor Pottmeyer says: “The cyclical development had a material adverse impact on our net revenue in the third quarter.

“On a positive note, however, Deutsche Boerse was once again able to achieve secular net revenue growth [of 4 percent]. Among other factors, subject to an increase in market activity in the fourth quarter, we still consider our full-year targets to be achievable.”

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