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Major Securities Exchange Picks With Rising August Volumes


Despite a cloud of uncertainty looming over the global market environment due to rapidly changing climatic conditions — storming the industrial space with consecutive catastrophic disasters Hurricanes Harvey and Irma — and the palpable disagreement among the Fed officials over how quickly to raise interest rates, the performance of some pivotal players in the Securities and Exchanges industry has shown a ray of hope.

Some major players of Securities and Exchanges industry have been successfully recording robust trading volumes and August was no exception. We expect to see these key players generating solid trading volumes in the near term as well.

Momentum to Continue?

The key players in the Securities and Exchanges industry are largely dependent on their product and service portfolios to churn out revenues. The major services include trade execution, clearing, settlement services for securities and commodity contracts, listing services as well as trading and clearing systems services. There are other sources of revenues that might include data products, financial indexes, along with information and public company services.

In a highly competitive industry, demand is fueled by investor-confidence, dependent on the overall growth of the industry itself. Interestingly, the individual exchanges’ profitability rests on maximization of transaction and clearing fees while keeping transaction-based expenses low. Such organic growth will help the individual exchanges drive their revenues, which in turn will continue to fuel increasing trading volumes. This makes us hopeful for the future, which has a high possibility to see major players in the industry generating substantially high trading volumes.

This apart, the individual exchanges rely heavily on their diverse product offerings to drive their overall growth. With introduction of new products, which not only cater to the demands of the derivatives industry but also complement the core product lines, the key players are expected to strengthen their market position and global reach. To that end, the companies remain committed toward investing in new product extensions and offerings to boost overall growth, thereby creating an opportunity for trading volumes to thrive.

The individual exchanges are focused on building a strategic economic market model through technological advances and upgrade of diverse service and product offerings to help them stay ahead and maintain the competitive streak amid the changing industry dynamics.

Interestingly, some leading players in the industry have been making substantial efforts to expand product portfolio via prudent acquisitions, which in turn will aid them to retain their market share, expand product lines as well as widen global footprint. For instance, the acquisition of Bats Global Markets by CBOE Holdings on Feb 28, 2017, has enabled the latter to broaden and diversify its product portfolio.

Also, on Jul 5, 2017, Intercontinental Exchange, Inc. ICE has purchased the remaining 20% stake in ICE Endex shares from N.V. Nederlandse Gasunie. The buyout adds capabilities to Intercontinental Exchange’s European gas and power portfolio.

We wait to see if new product initiatives and global presence help these major players in the Securities and Exchanges industry to post high trading volumes in the future.

The Zacks Securities and Exchanges industry is currently ranked at #105 (which lies in the upper half of the Zacks Industry Rank for 252 plus industries). Notably, the industry has outperformed the broader market year to date, evident from a gain of 17.3% compared with the S&P 500’s increase of 11.2%.

Stocks in Focus

Following are some key stocks which have exhibited robust trading volumes in August, witnessed upward estimate revisions and their respective share prices have also the industry, quarter to date:

CBOE Holdings, Inc. CBOE recorded an average daily volume (ADV) of 7.4 million contracts, having soared nearly 33% year over year. Additionally, the company witnessed 2017 and 2018 estimates moving north by nearly 0.6% and 1.8%, respectively, over the last 60 days. This is reflected through the company’s Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of CBOE Holdings have rallied 14.6% quarter to date compared with the industry’s gain of 2.9%. The long-term growth is pegged at 17.4%.

CME Group Inc. CME reported an ADV of 16 million contracts per day, improved 16% year over year. This apart, the company witnessed 2017 and 2018 estimates moving north by nearly 0.2% and 1%, respectively, over the last 60 days. The company carries a Zacks Rank #3 (Hold). The long-term growth is pegged at 10.6%.

Also, shares of CME Group have gained 3.9% quarter to date compared with the industry’s growth of 2.9%.

Nasdaq, Inc. NDAQ posted an ADV of 134 million contracts with respect to U.S. equity derivatives, thus reflecting an increase of 7.5% year over year. Also, the company saw 2017 and 2018 estimates moving upward by nearly 1.7% and 0.4%, respectively, over the last 60 days. The company carries a Zacks Rank #3. The long-term growth is pegged at 8.7%.

Also, shares of Nasdaq have gained about 5% quarter to date compared with the industry’s rise of 2.9%.

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