After a slight increase in October, IntercontinentalExchange‘s equity options volumes saw a 14% year on year (y-o-y) decline in November, with a 300 basis point (3%) dip in its market share. The industry-wide equity options daily trading volumes remained around flat in comparison to November 2016. ICE’s market share decline is likely due to competitor NASDAQ’s strong position in equity options after the acquisition of ISE in 2016. Owing to the improvement in U.S. macro conditions, ICE’s trading volumes and market share have improved sequentially from prior months (+7% above October volumes).
ICE’s cash equities volumes suffered the most, with a more than 21% drop in trading volumes and a 110 basis point drop in market share. The industry-wide volumes saw a 17% decline. The company’s continued market share losses over the past few months are a concern.
The exchange generates around 30% of its revenues from these asset classes. With a soft performance across both, we expect the company’s top line to see some pressure in Q4.
We have a $70 price estimate for Intercontinental Exchange’s stock, which is about in line with the current market price.
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