For all the technology, infrastructure, and resources it takes to run some of the biggest trading markets, exchange operators have still maintained eye-popping profit margins as their revenues continue to grow.
The average operating margin at the largest exchanges in 2018 was just over 60%, according to a report by the consultancy Opimas. Of the US-based exchange operators in the report, Intercontinental Exchange (ICE), which owns the New York Stock Exchange, topped the list with a profit margin just shy of 70%.
The Chicago-based CME Group and Cboe Global Markets had profit margins upward of 60%. Of US exchanges, Nasdaq had the smallest margin, slightly under 50%.
Globally, the Hong Kong Exchanges and Clearing Limited, Australian Securities Exchange, and Brasil, Bolsa, Balcão, had the highest operating margins, all north of 70%.
By way of comparison, the average operating margin for investment-services companies in the first quarter of 2019 was about 21%, according to data compiled by CSIMarket.
The exchanges' large profit margins come at a time when their business is booming, thanks in large part to Wall Street's growing appetite for data. Trading venues have capitalized on the financial data they collect. An analysis report by one industry group found NYSE raised market-data fees anywhere from 967% to 2,916% over the past eight years.
Global revenue was just shy of $30 billion in 2018, according to the report, with revenue growth averaging 11%.
That's not to say it's been smooth sailing for the trading venues recently. Market participants' gripes over exchange fees has continued to grow, reaching a fever pitch in recent months.
US exchanges have also begun to wage war with their own regulator, the Securities and Exchange Commission, over a pilot fee they have said could be detrimental to the markets. In February, Nasdaq, NYSE, and Cboe separately filed lawsuits against the SEC.
Read more: The Wall Street battle over skyrocketing market data fees could reach a boiling point in 2019
Data was one of the largest sources of revenues for both Intercontinental Exchange and Nasdaq, accounting for about 40% and 28% of their businesses, respectively.
Internationally, some exchanges have doubled down on their efforts to grow their data business, as the report said. Revenue from data outstrips trading and clearing revenue generated at the London Stock Exchange and SIX Swiss Exchange.
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