Low volatility in the stock markets in the second quarter had a negative impact not only on the results of investors' portfolios but also on the revenues of trading venues. This is confirmed by the financial results published today (Tuesday) by Spectrum Markets, a securitized derivatives provider, which reported a noticeable decline in activity in the second quarter. However, this did not prevent the company from achieving record trading volumes for the entire first half of 2023.
Interestingly, the report also highlighted the significant importance of trading outside conventional exchange operating hours.
Spectrum Markets Reports Record First Half of 2023
The first half of 2023 saw Spectrum Markets trade 787 million securitized derivatives, marking a roughly a jump of 20% from the 657 million sold in H1 2022. On the other hand, the Q2 dip was characterized by trading numbers at about 340 million, marginally less than the 357 million of the previous year.
This decrease mirrored a broader industry trend. Nevertheless, Spectrum's total order book turnover rose to €1.77 billion in H1 2023, up from €1.65 billion reported in the same period last year.
"As Spectrum enters the second half of the year, the business remains focused on driving innovation, and we continue to invest heavily in enhancing and expanding the foundations of our pan-European trading ecosystem and remaining at the forefront of retail trading in Europe," Nicky Maan, the CEO of Spectrum Markets, commented.
Beyond Nine-to-Five: Surge in Off-Hours Trading
In addition, Q2 2023's trading patterns revealed that 35.3% of individual trades occurred outside conventional hours. Traders were the most active on indices (79,2%), and the most dominant instruments were DAX 40 (25.3%), S&P 500 (20.8%), and NASDAQ 100 (18.8%).
This confirms the industry-wide trend also visible among typically retail trading firms, which have recently expanded their offerings to include trading in stocks outside the traditional session hours.
In July, as many as three firms, including eToro, Robinhood, and Interactive Brokers, offered extended trading periods. The social trading giant now offers three additional trading hours daily for the most popular Wall Street companies. In recent months, Robinhood tested the 24-Hour Market service, which it implemented for all its clients last month. It covers the 43 most popular stocks and ETFs.
On the other hand, Interactive Brokers introduced overnight trading for 10,000 ETFs and US stocks. This is available from 8:00 pm EST to 3:50 am ET, from Monday to Friday.
Spectrum Expands Portfolio and Partnerships
In addition, Spectrum's product catalog has also expanded, with almost 18,000 instruments now available. This growth is part of the venue's strategy to evolve continuously, fostering a wider array of products and increasing its European retail investor base. Significant partnerships include welcoming UniCredit Bank AG in May.
June was another milestone month, with Spectrum supporting the German Derivatives Association (DDV). This alliance offers Spectrum a chance to join industry panels and working groups, facilitating a deeper understanding of regulatory initiatives in the European market.
"We've seen a drop in trading during the last three months, which isn't a huge surprise considering the wider market environment right now. But I'm pleased that, overall, with the record quarter we experienced in Q1, volume is still up for the first half of the year," Maan added.
Spectrum closed last year with a record, with turnover rising 147% to €3.33 billion. During that time, the platform processed nearly 3.5 million transactions, and the total trading volume grew by 68% from 848 million to 1.42 billion securitized derivatives.
