Classification of Revenue Sources
Intercontinental Exchange and Nasdaq’s total revenues can be broadly classified into four categories. Trading and Clearing Revenues:
It represents electronic trading fees, private transaction surcharge, and other volume-related charges received by the exchange.Data Services & Market Technology Revenues:
It represents charges for data distribution, connectivity, analytics services, and other technology solutions (NASDAQ reports both these revenue streams separately)Listing Revenues:
A listing fee is charged on an annual basis along with a fee related to other corporate actions such as stock splits and initial public offerings.Other Revenues:
It includes interest income on margin deposits, facility usage fee, market maker service fee, public relations solutions, etc.
Transaction charges and data services are the two prominent revenue sources for both the exchanges.
(Note: Intercontinental Exchange acquired NYSE in 2013)
COMPARISON OF TOTAL REVENUES
Intercontinental Exchange Total Revenues
Nasdaq Total Revenues
In 2018, Intercontinental Exchange and Nasdaq reported total revenues of $6.2 billion and $4.2 billion, respectively.
Revenues for both companies have trended higher over recent years. ICE's notable jump in revenues in 2016 was due to its acquisition of Interactive Data Corp (ICE) in December 2015
Moreover, Intercontinental Exchange’s cash equities and equity options trading revenue was $1.6 billion (rest from commodities trading
As Nasdaq does not report its trading revenues separately for its U.S and European exchanges, we estimate that Nasdaq generates nearly 90% of its $2.3 billion cash equity and equity options revenue from the U.S. (As market capitalization of Nasdaq’s European exchanges was just $1.3 trillion as compared to $11.1 trillion of its U.S. venues in 2018
Considering the above assumption, we estimate that Nasdaq generates higher trading revenues from its U.S. equities business than the NYSE.
Comparison of Market Capitalization of U.S. Listed Companies
NYSE Market Capitalization
Nasdaq U.S. Exchanges Market Capitalization
In 2018, NYSE and Nasdaq reported market capitalization* of $28.5 trillion and $11.1 trillion of the U.S. listed stocks, respectively.
Since 2015, Nasdaq’s market capitalization has grown at a CAGR of 6%, higher than that of NYSE.
(*Note: Market capitalization is referred from 10-k for Nasdaq and December’s market capitalization for NYSE from https://www.nyse.com/market-cap. For 2018, June’s market capitalization is considered for NYSE. Also, market capitalization refers to the market value of stocks listed on the exchange and should not be considered as the market value of ICE and Nasdaq stock)
Comparison of Total U.S. Listings & IPOs
Total U.S. Listings: NYSE (Solid Line) vs. Nasdaq (Dotted Line)
U.S. IPOs: NYSE (Solid Line) vs. Nasdaq (Dotted Line)
The total listings on Nasdaq has been much higher than NYSE.
In 2018, total listings on Nasdaq and NYSE were 3058 and 2200, respectively.
A similar trend is also observed in IPOs, were Nasdaq accommodated more than double the number of IPOs by NYSE.
Comparison of Capital Raised By IPOs
Capital Raised By NYSE IPOs
Capital Raised By Nasdaq U.S. IPOs
In 2018, the capital raised by IPOs on NYSE
was nearly the same at $30 billion
and $28 billion
However, the capital raised by IPOs on Nasdaq
has grown at a CAGR of 18.6%
as compared to NYSE’s 16.4%
Comparison of U.S. Cash Equity Market Share
U.S. Cash Equity Average Daily Share Volume [A]
U.S. Daily Cash Equity Matched Share Volume: NYSE (Solid Line) vs. Nasdaq (Dotted Line) [B]
In cash equity markets, both the exchanges have maintained their matched market share (matched volume refers to total shares traded on the exchange) since 2015, with NYSE consistently 2-percentage point higher than Nasdaq.
(Note: Nasdaq reports FINRA TRF volume separately).
NYSE U.S. Cash Equities Matched Market Share [= B / A ]
Nasdaq U.S. Cash Equities Matched Market Share [= B / A ]
Comparison of U.S. Equity Options Market Share
U.S. Equity Options Average Daily Volume
U.S. Equity Options Volume: NYSE (Solid Line) vs. Nasdaq (Dotted Line)
In the equity options market, Nasdaq’s share has been considerably higher than NYSE.
But the low U.S. equity options daily trading volumes of just 18.2 million
as compared to the U.S. cash equities daily trading volumes of 7.3 billion
in 2018 makes it less important.
NYSE U.S. Equity Options Market Share
Nasdaq U.S. Equity Options Market Share