Torrid August to bring gains for exchanges

THE turmoil to hit Europe’s equity markets in August brought unexpected gains for equity trading platforms as trading volume and turnover soared, data has showed.

Chi-X Europe, Europe’s biggest alternative trading platform, said August had been “an all-time record month” as it traded €222.7bn (£196.6bn) of equities, almost a fifth more than its previous record of €189bn in May 2010.

Data from the London Stock Exchange also showed that its equity turnover leapt to £135.7bn in August – the highest monthly turnover since October 2008, and 60 per cent higher than August last year.

So while the market volatility hurt traders in August and pushed share offerings to the lowest level in years, exchanges may benefit from a welcome revenue boost to exchanges in a normally quiet time of year.

Chi-X’s trading volumes were 87 per cent higher than in August 2010, at 23.3bn trades, while London Stock Exchange volumes were 40 per cent up at 26.4bn trades, according to data collated by Fidessa. These gains will feed into third-quarter revenues.

Trading platforms for UK equities saw a spike in volume and turnover in August as a torrent of bad economic news engulfed markets.

Markets plunged due to tense US national debt negotiations and the downgrade of its AAA rating by Standard & Poor’s, Eurozone debt fears and concerns over France and French banks’ indebtedness.

BGC Partners markets analyst Louise Cooper warned that trading volumes had been highest on days when markets fell, pointing to a further downward trend in the market, despite a rally in the past week.

“This shows that there is little conviction to this rally - on the days the market goes up, little volume trades,” she said. “Upside seems unlikely given that there is virtually no appetitive for risk.”