Net revenue

Aquis sees its annual net sales increase by 42% despite the decline in its market share

Aquis saw its net revenue reach £16.2m last year according to its 2021 financial results, representing a growth of 42% on the previous year.

The exchange operator attributed this to its exchange revenue, which rose 26% to £9.8 million thanks to increased activity levels and the addition of new members, and to data revenues which reached £2.3m, up 159% year-on-year. Licensing revenue also reached £4.4m, up 90% year-on-year, while Aquis’ pre-tax profit rose 540% from 2020 to 3. £2 million.

The only blemish on its less than glowing financial report was a loss of market share seen in the second half of the year, which fell 6% from the second to the fourth quarter. Aquis attributed this to increased market volatility, an industry-wide shift to dark trading venues and a shift in strategy from a designated liquidity provider.

“The only blemish on the horizon is falling market share but I think that’s very explainable. All sources of income are working in a context that is not perfect for Aquis. High volatility is not for us. When VIX goes up, our market share goes down,” Aquis chief Alasdair Haynes told TRADE. “During this period, our market share was low but our volumes were high. So even though market share has dropped, it hasn’t impacted revenue because we charge on a message-based basis. »

Aquis confirmed earlier this month that it would absorb dark book trading activities, UBS MTF, to accommodate the industry’s shift to dark trading in light of the easing of regulations in the UK. United after Brexit. The deal is expected to close early in the second quarter.

“There has been a shift towards dark trading, more than we anticipated. When we founded Aquis, I made the mistake of saying that we wanted to be in the light book and that because we have these special rules, it makes us different – it is – but you have to offer the full toolkit to your clients,” adds Haynes. “Otherwise you become vulnerable if there is a change and you cannot The UBS MTF agreement fills the void perfectly.

Haynes confirmed that Aquis had been working on the technology to ensure a seamless transfer of UBS’s MTF feed for several months and was not taking on anyone as part of the deal. The exchange intends to maintain MTF revenue and market share with plans to expand its service in Europe by the end of this year.

Looking ahead, Haynes noted that while market volatility and the changing socio-political and macroeconomic climate due to the conflict in Ukraine were having significant impacts on markets, he did not expect these last forever. He identified businesses in the £20-60m range as the “sweet spot” for Aquis after Brexit.

The exchange services provider has also identified market data as a key contributor to the Group’s results and as a “key pillar of its strategic plan” in its 2021 results, particularly in light of the now very likely implementation of a consolidated band in the UK and Europe. It attributed its significant growth in market data revenue – which reached £2.3 million in 2021 – to its harmonization of its data services across all of its businesses.

“We want to make sure that we offer the same data experience as national exchanges. We do not charge for data. That said, we have seen significant data growth as we grow our primary and secondary businesses,” he said.

“The harmonization to have one contract for these products means that if we get a handful of companies that grow significantly, that’s unique data and it’s incredibly valuable. If we see a consolidated band, that could be a very serious source of income.

When asked if he would ever introduce data charges, Haynes said never say never, however, reiterated his love for the subscription model.

“I love the subscription model and what it offers. I’m passionate about subscriptions changing human behavior. It’s changed the way people work, including data and having connectivity and offering zero marginal cost, this has huge appeal not only for the institutional market, but also for the retail market.