We are delighted to share the first report in our Industry Primers series, this one on exchanges and financial market infrastructure. The series exists to help fundamental, long-term investors expand and deepen their circle of competence, one industry at a time, and your feedback on what was useful and on which industries to cover next shapes what we produce. Two podcast episodes complement the report, the first telling the industry’s story and the second digging deeper into the fundamentals from an investor’s standpoint. The companion slide deck (free to access) and the full research report (members only) follow below.
A few dozen listed companies run the machinery through which the world’s securities and derivatives trade, clear and settle, and their combined value is small beside the flows they carry. Roughly 45 listed companies were worth about $700bn in aggregate at the end of August 2026, less than one mega-cap technology company. CME Group (Nasdaq: CME), the most valuable at $103bn, and Intercontinental Exchange (NYSE: ICE), at $90bn, hold the main derivatives franchises, while London Stock Exchange Group (LSE: LSEG), at about $59bn, is by revenue a data company. The Depository Trust & Clearing Corporation (DTCC), a user-owned utility, processed more than $3.8 quadrillion of securities transactions in 2024. CME’s fee of about $0.61 on an E-mini S&P 500 future carrying about $300,000 of notional is about one-fiftieth of a basis point, and CME earned a 65 percent operating margin in FY2025.
Since these businesses became investable, the median major venue has beaten the stock market by a wide margin, but the best and the worst outcomes differ by a factor of about 80. Fourteen major venues returned a median of about 17 percent a year since their IPO or demutualization, against about 11 percent for the S&P 500 from CME’s December 2002 listing. At the first day’s close, $10,000 invested became about $1.2m at Hong Kong Exchanges and Clearing (HKEX: 388) but only about $15,000 in dollars at the predecessors of Brazil’s B3 (B3: B3SA3). The two best performers, Euronext (Euronext Paris: ENX) and Japan Exchange Group (TSE: 8697), were the cheapest at listing, at about 11 and 7 times earnings. An unscreened buyer earned high single digits, while owners of captive clearinghouses bought at moderate multiples under capable allocators earned 16 to 20 percent or better.
The companion deck. Exchanges & Financial Market Infrastructure: a self-contained summary of the report.
Key findings
The report follows the industry from the Amsterdam exchange of 1611 to the debates of 2026, and every figure in it is dated and sourced in the notes. These are the main findings of each part.
An exchange group earns from three activities on one platform, and the durable profit sits in clearing trades and selling data rather than in matching them. The group matches buyers and sellers for a fee, clears the trades through a central counterparty that guarantees both sides and holds their margin, and sells the record of prices. CME held $160bn of clearing-member cash at the end of 2025, up $61bn in a year. In US cash equities, where regulation separated the three activities, 56 percent of volume executed off-exchange on August 31, 2026, and the $4.7bn of FY2025 gross revenue at Cboe Global Markets (Cboe: CBOE) shrank to $2.4bn after payments to liquidity providers, pass-through fees and index royalties. (Part I, Orientation)
For most of their history exchanges were member clubs that protected brokers’ commissions, and screens and new owners turned them into companies that outside shareholders could own. The Buttonwood Agreement of 1792 fixed a minimum commission of a quarter percent that lasted 183 years, until May Day 1975. Chicago invented nearly every franchise of today’s derivatives business between 1972 and 1982. From 1993 to 1998 the electronic DTB, later Eurex, took the Bund future from the London floor of LIFFE, rising from about 24 percent of volume to above 99.9 percent. Demutualization followed, and NYSE seats that traded at $975,000 in January 2005 reached $4.0m that December. (Part II, Evolution, Chapters 4 and 5)
Mergers between exchanges in different countries almost always fail, while vertical, data and software acquisitions close. CME acquired the CBOT for $12bn and NYMEX for $8.9bn, ICE acquired NYSE Euronext for about $11bn in 2013, and LSEG acquired Refinitiv for $27bn in 2021. In 2026 ICE agreed to acquire MarketAxess (Nasdaq: MKTX) for about $6bn, and Deutsche Börse (Xetra: DB1) agreed to acquire Allfunds (Euronext Amsterdam: ALLFG) for €5.3bn. Regulators or politics stopped four cross-border mergers between 2011 and 2017. That record is why the industry remains divided into national and product groups rather than one global exchange. (Part II, Evolution, Chapter 6)
A futures franchise whose open positions sit in its own clearinghouse has not lost its market since 1998, while regulation took most of an equity exchange’s trading away by design. The Bund moved because the challenger had order flow sponsored by its owners, an all-in cost advantage of about 3 percent and open access, a combination no later challenger has had. ICE grew from Jeffrey Sprecher’s 1997 purchase into a $90bn company by buying networks for their data at disciplined prices. Regulation took the NYSE from about 80 percent of trading in its own listings to a family share of about 23 percent. A trader’s default at the clearinghouse of Nasdaq (Nasdaq: NDAQ) in 2018 and the nickel cancellation at the London Metal Exchange (LME) in 2022 showed that members bear the losses and shareholders the reputational cost. (Part II, Evolution, Chapter 7)
Matching trades earns thin margins wherever a product can trade elsewhere, while clearing and data earn wide ones. Cboe’s exclusive SPX option earns $0.92 a contract against $0.066 for an option listed on many venues, about 14 times as much. Clearing is paid twice, through fees and through interest on margin balances, and LSEG paid £1.2bn in 2025 only to extend its share of SwapClear’s economics through 2045. Cboe’s Data Vantage produced $636m of FY2025 revenue against $13m of segment cost of revenue. Acquirers now pay 8 to 16 times EBITDA for matching businesses and 20 times or more for data. (Part III, Structure & Economics, Chapter 8)
Volatility drives exchange volumes, and four decades of records confirm that volumes rise in market stress. CME’s volume in January 2008 ran 65 percent above the prior year, and 2022 brought record volume, up 19 percent, in a year when both stocks and bonds lost money. Rate per contract follows product mix rather than a price management sets: CME’s runs from $0.49 for interest rate contracts to $1.4 for agricultural ones, and volume rather than pricing drove about 90 percent of its FY2025 fee growth. India’s SEBI showed that regulation can outweigh volatility by cutting the income of the National Stock Exchange (NSE) 2.4 percent in FY2026. (Part III, Structure & Economics, Chapter 9)
An exchange group’s costs are small and mostly fixed, so its earnings move much faster than its revenue, in both directions. ICE converted incremental net revenue into operating income at 95 percent in FY2025, HKEX at 93 percent, Nasdaq at 89 percent and CME at 76 percent. The leverage works in reverse as well: MarketAxess’s operating margin fell from 48 percent in 2021 to 41 percent in 2025 as growth stalled against a cost base built for more. Capital spending runs at 4 to 6 percent of revenue and free cash flow often exceeds 90 percent of net income, although a clearinghouse’s capital cannot be paid out. (Part III, Structure & Economics, Chapter 10)
The lasting advantage in this industry is open interest held in an exchange’s own clearinghouse, and every well-funded attack on a benchmark futures franchise since 1998 has failed. A trader who moves a position elsewhere must close and reopen it, post margin twice and give up netting. Six challengers backed by dealers or other exchanges attacked benchmark futures with fee cuts, and all six failed. The live test is FMX, backed by BGC Group (Nasdaq: BGC), which clears US rates futures at LCH so that they offset against SwapClear’s swaps, and whose futures open interest has grown fast from a very small base. CME carries $17bn of trading-product intangibles that it never amortizes. (Part III, Structure & Economics, Chapter 11)
The listed companies sort by whether their clearing is captive, how much of their revenue recurs, and whether a policy grant protects the franchise. CME took 81 percent of its $6.5bn of FY2025 revenue from transactions, while about 60 percent of ICE’s revenue and more than 70 percent of LSEG’s recurs. HKEX rests on its exclusive Stock Connect gateway to mainland China, and India, the largest derivatives market by contracts, is the most exposed to its regulator: the NSE filed in June 2026 for an IPO at up to about $60bn, while BSE (NSE: BSE) and MCX (NSE: MCX) traded at 48 and 56 times trailing earnings. (Part IV, The Players, Chapter 12)
The industry’s two best capital allocators followed opposite strategies and earned nearly the same return, because neither let its clearinghouse leave the company. Jeffrey Sprecher’s ICE spent about $55bn on acquisitions and compounded at about 18 percent a year from its 2005 IPO. Terry Duffy’s CME made essentially two large deals in twenty years, refused to clear rivals’ contracts, and returned more than $28bn since 2012 through a variable dividend, compounding at 20 percent a year since 2002. At Deutsche Börse, Werner Seifert lost his job in 2005 when TCI and Atticus, holding under 10 percent between them, forced him to drop a £1.4bn bid for the London exchange. (Part IV, The Players, Chapter 13)
The largest institutions in market infrastructure cannot be bought, and their charters decide where the listed companies’ profits form. DTCC is the sole clearer of US equities, LCH’s SwapClear cleared $1,941tn of swap notional in 2025, and Euroclear holds more than €43tn in custody and sits on about €190bn of immobilized Russian central-bank assets. Clearing the same trade supports margins of 60 to 80 percent where the exchange owns the clearinghouse and roughly zero where a user-owned utility clears at cost, as DTCC and the options clearer OCC do. (Part IV, The Players, Chapter 14)
Exchange accounts mislead the casual reader in three places, and monthly disclosures let a careful one estimate revenue before it is reported. Cboe reports $1.9 of revenue for every dollar it keeps, so a model starts from net revenue. Clearing-member collateral sits on both sides of the balance sheet, which is why CME’s total assets grew from $137bn to $198bn in one year, and it comes out before any return is computed. In FY2025 adjusted earnings exceeded GAAP earnings by 20 percent at ICE, 13 percent at Nasdaq and 76 percent at LSEG, almost all of it amortization of acquired intangibles. Transaction revenue is average daily volume times trading days times rate per contract, and the volumes are published monthly. (Part V, Speaking the Language)
In August 2026 the sector traded near the middle of its twenty-year valuation range, and entry price has decided ten-year outcomes as much as the quality of the franchise. The median of eighteen companies was 25 times trailing earnings and 16 times EV/EBITDA, and S&P Global (NYSE: SPGI), at 17 times EV/EBITDA, traded below CME at 22 times. MarketAxess closed at $590 on December 22, 2020, about 75 times FY2020 earnings inflated by a burst of credit volatility. Its revenue then grew every year, yet a buyer at that close who holds to ICE’s $167 cash offer of July 2026 loses about 20 percent a year over 5.6 years. (Part VI, Analysis & Valuation, Chapter 19)
CME’s long return came from growth in revenue per share, a one-time rise in margins and the payout, with little from a higher multiple. CME’s 20 percent a year since 2002 splits into roughly equal thirds: per-share revenue growth of 8.4 percent a year, the margin build and the payout, with the change in multiple adding only about two points a year. ICE returned 17 percent a year from a first-day close at about 53 times earnings, because its revenue per share compounded at 18 percent. Captive clearing was the best single predictor of returns, and the entry multiple was worth as much as the choice of franchise. From mid-range multiples, the report’s base rate for the median franchise is about 8 to 12 percent a year. (Part VI, Analysis & Valuation, Chapter 20)
So far AI brings exchanges new channels of order entry and internal efficiency, and the orders that software agents place still pass through the exchanges. As of mid-2026 there is no credible public evidence that language models earn excess returns as autonomous traders. Robinhood Markets (Nasdaq: HOOD) opened its platform to outside agents on May 27, 2026, and their orders route through its brokerage to the exchanges. Nasdaq’s Verafin is the only AI business in the sector with disclosed results, with revenue up 22 percent in FY2025 and 750 clients using its agent features by July 2026. The matching engines stay closed to AI by design, and the costs come first: ICE raised its 2026 capital spending to about $850m. (Part VII, The AI Inflection, Chapter 21)
Exchange data is the one input to financial AI that cannot be synthesized, and the most countable gain so far is hedging demand from the AI economy. No exchange had licensed a dataset for model training as of August 2026. Google (a unit of Alphabet, Nasdaq: GOOGL) holds $1bn of CME convertible preferred stock and Microsoft (Nasdaq: MSFT) took about 4 percent of LSEG. ICE’s US power futures volumes rose 30 percent to a record 7.8bn MWh in 2025, CME planned to launch futures on GPU rental rates on October 5, 2026, and ICE describes its $1.6bn investment in Polymarket as a data acquisition. (Part VII, The AI Inflection, Chapters 22 and 23)
Investors in market infrastructure rarely lose money to bankruptcy, and the report finds six ways they do lose it. The first is a loss at a clearinghouse: in 2018 one trader’s default consumed €107m of a €166m default fund at Nasdaq Clearing, and in March 2022 the LME, with nickel at $101,365 a tonne, canceled every trade since midnight. The others are regulation that opens matching to competition, long calms and windfall earnings priced as permanent, technology failures such as the abandoned CHESS rebuild at ASX (ASX: ASX), acquisitions at about 30 times EBITDA, as Nasdaq paid for Adenza, and clearing without intermediaries, the model of Hyperliquid, which cleared $633bn offshore in the first quarter of 2026. (Part VIII, Risks & Debates, Chapter 24)
The industry entered late 2026 with record results on volumes driven by retail trading rather than a market shock, and seven debates will shape the next decade. Prediction markets, where Kalshi was valued at $22bn in May 2026, await a Supreme Court ruling on whether event contracts are federally regulated swaps or state-regulated gambling. DTCC, ICE and CME compete for about $4 trillion a day of Treasury clearing, and the SEC proposed in June 2026 to rescind the trade-through rule with 56 percent of US equity volume already off-exchange. Same-day options reached a record 66 percent of SPX volume in July 2026 without a test through a discontinuous move. Tokenization, consolidation in Europe and the volume booms in India and Hong Kong complete the seven. (Part VIII, Risks & Debates, Chapter 25)
The appendices give the analyst the working tools: the investable universe of roughly 45 listed companies by segment with tickers, listing venues, market capitalizations and one-line descriptions, a sixty-question due-diligence checklist ordered to match the analytical procedure of Chapter 18, a reading list, and the sources for the report. (Appendices)
How to use this primer
The report does not need to be read in order. Suggested paths:
a generalist with limited time, Parts I and VI plus the checklist in Appendix B;
a reader interested in the history, Part II with Chapter 13;
an accountant, Part V;
an analyst working on a specific company, Chapter 12, then Parts III, V, and VI in order;
a risk officer, Part VIII with Chapter 17;
a technologist, Part VII.
Every chapter ends with a “What to remember” box, and the twenty-five boxes read in sequence summarize the report. The checklist follows the order of the analytical procedure in Chapter 18; a company that fails the franchise questions in its first section rarely needs the rest.
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This content is published by MOI Global for educational purposes only. It is not investment advice, an offer, or a solicitation, and no security mentioned herein is recommended for purchase or sale. The publisher and contributors may hold positions in securities discussed. Figures are believed accurate as of the dates stated but are not warranted; readers should verify all data against primary sources before relying on it. Nothing herein constitutes legal, tax, or accounting advice.