Financial Exchanges (CBOE, CME, ICE, NDAQ, MKTX, LSEGY, JPXGY, DBOEY, etc.)

[Rainier]

59 minutes ago, schin said:

 

@Rainier - Based on the table above, all seem to be in the PE range of 21-24 (twenties).  All the metrics seem comparable too. I was looking at OTCM and you're not getting a lot of discount for their smaller size/market capitalization..so, that's why I was inquiring with the group. It's seems like the same fish in the same barrel... so minus well got for the larger market leaders unless I'm missing something.

 

It's almost like Visa and Mastercard to me. They have reach valuations, but they're legal oligopolies.  

 

I know people say you cannot go wrong.. but, there's always a Coke to a Pepsi...  Like for the longest time, there's a premium to the front runners... like back in the day, Intel was a better market performer than AMD.  Oracle always performed better than Sybase and Informix. 

I agree with all of this.  I have come to view these exchanges as legal oligopolies with just enough competition to incentivize them to have decent management and some innovation.

 

Regarding the values, I tend to start with free cash flow when I am trying to think about my view of value. FCF Yield for ICE, NDAQ, TMXXF, Euronext, Tel Aviv, and ASX are all in the sub-5% range. The others range from low 5% up to 9%. CME is also sub 5%, but I bought it as a small tracker a while ago before I had done much research on the industry. So, I guess I should throw it into the same category as ICE and NDAQ as hoping I get a chance to buy more on a pull back.

[Marco Van Basten]

1 hour ago, Rainier said:

I agree with all of this.  I have come to view these exchanges as legal oligopolies with just enough competition to incentivize them to have decent management and some innovation.

 

Regarding the values, I tend to start with free cash flow when I am trying to think about my view of value. FCF Yield for ICE, NDAQ, TMXXF, Euronext, Tel Aviv, and ASX are all in the sub-5% range. The others range from low 5% up to 9%. CME is also sub 5%, but I bought it as a small tracker a while ago before I had done much research on the industry. So, I guess I should throw it into the same category as ICE and NDAQ as hoping I get a chance to buy more on a pull back.

Don't focus on today's free cash flow yield.  Focus on what it will be ten years hence.  When I bought Tel-Aviv stock exchange for the first time six years ago, it was hardly profitable but I could see that if it hit profitability levels one would expect based on GDP, the stock would be a ten bagger.  

[Rainier]

19 minutes ago, Marco Van Basten said:

Don't focus on today's free cash flow yield.  Focus on what it will be ten years hence.  When I bought Tel-Aviv stock exchange for the first time six years ago, it was hardly profitable but I could see that if it hit profitability levels one would expect based on GDP, the stock would be a ten bagger.  

Congrats on the return you've seen on it. I wish I had known about it at any point before this year!

 

Yeah, sometimes it seems like I am the only person on the forum that uses a DCF. But it helps me to put things into perspective and to compare companies. So, for all of these I went back and looked at historical growth and tried to come to a reasonable FCF growth rate over a ten year hold period. I do this with any company I purchase that is in a stable/predictable phase of its business. Even with the run its been on, TASE isn't crazy expensive given its cash flow growth.

 

[Marco Van Basten]

5 minutes ago, Rainier said:

Congrats on the return you've seen on it. I wish I had known about it at any point before this year!

 

Yeah, sometimes it seems like I am the only person on the forum that uses a DCF. But it helps me to put things into perspective and to compare companies. So, for all of these I went back and looked at historical growth and tried to come to a reasonable FCF growth rate over a ten year hold period. I do this with any company I purchase that is in a stable/predictable phase of its business. Even with the run its been on, TASE isn't crazy expensive given its cash flow growth.

 

It has been pitched on this website several times over the past several years, but it is hard to see all of the ideas.  

[Xerxes]

From Gemini

 

Why Deutsche Börse unique in the pack. 

 

While most exchanges facilitate trading, Deutsche Börse (DB1) has built a unique business model that functions more like a global utility and a software house than a traditional stock market.

Here is what makes it unique "above and beyond" its peers:

 

1. The "Vertical Integration" Powerhouse

Most exchanges specialize: Nasdaq is great at technology/listings; CME is the king of derivatives. Deutsche Börse is one of the only operators in the world that owns the entire value chain in-house:

• Pre-Trading: It owns SimCorp (investment software) and ISS (ESG data), providing the tools fund managers use to decide what to buy. 

• Trading: It owns Xetra (cash equities) and Eurex (one of the world's largest derivatives exchanges). 

• Post-Trading: It owns Clearstream, a massive international central securities depository. 

• Unique Edge: Because they own every step, they capture a fee at every single click of a professional investor's mouse.

 

2. Clearstream: The "Bank for Banks"

This is Deutsche Börse’s "secret weapon" that rivals like Euronext or Nasdaq do not have at this scale.

• Asset Custody: Clearstream holds over €18 trillion in assets under custody.

• Interest Income: When interest rates are high, Clearstream earns massive "interest income" on the cash balances held by its clients. In 2024–2025, this became a major profit driver that helped Deutsche Börse outperform exchanges that rely solely on trading fees.

• The "Plumbing" of Europe: It is essentially the back-end infrastructure for the Eurobond market, making it systemically important to the global financial system.

 

3. Eurex: The Global Monopoly on Euro-Derivatives

If you want to hedge interest rate risk for the Euro or trade futures on the German DAX, you almost must use Eurex.

• Regulatory Moat: After Brexit, European regulators pushed for "Euro-clearing" to move from London to the EU. Deutsche Börse was the primary beneficiary of this massive shift, capturing market share that was previously held by the London Stock Exchange Group (LSEG).

• High-Margin Collateral: Eurex’s clearing house requires traders to post "margin" (collateral). Managing this collateral is a high-margin, low-risk business that generates steady cash flow.

 

4. A Pivot to "SaaS" (Software as a Service)

While other exchanges are buying data companies, Deutsche Börse is trying to become a software provider. 

• With the SimCorp acquisition, they now provide the "operating system" used by major pension funds and insurance companies. 

• This makes their revenue far more predictable. If trading volumes drop, people might stop buying stocks, but they won't stop paying their SimCorp software subscription.

 

[Xerxes]

On 12/17/2025 at 2:04 PM, Rainier said:

I've started researching the various financial exchanges. I like businesses that act like tollbooths or have an essential asset that would be extremely hard to replace. So, in theory, it looks like these companies have pretty durable businesses with decent moats. It is obviously competitive, but it seems like regional or niche exchanges typically just get bought up once they've achieved a decent size.

 

I've been looking at:

CME

CBOE

ICE

NDAQ

MKTX

LSEGY

DBOEY

JPGXY

HKXCY

TMXFF

ASXFY

 

Does anyone have thoughts (positive or negative) on these or others that might be worth looking at? I know that some of them have niches that they specialize in like commodities, bond trading, derivatives, and some own ancillary businesses. But are there any other things that differentiate them? Any pitfalls to avoid?

you are missing Toronto Stock Exchange 

[Rainier]

10 hours ago, Xerxes said:

you are missing Toronto Stock Exchange 

Thanks. I've added it to the watchlist.

Edited December 30, 2025 by Rainier

[Marco Van Basten]

8 hours ago, Xerxes said:

you are missing Toronto Stock Exchange 

Well, if you want to include really small exchanges, then NZX is another one.  

[Xerxes]

2 hours ago, Marco Van Basten said:

Well, if you want to include really small exchanges, then NZX is another one.  

uffffff

[Xerxes]

I would add ABAXX Technology. 
 

A $1B market cap minnow, that wants to be central exchange for LNGs. 
 

I can across in a podcast few months ago, took mental note; and then completely forgotten about it. 

[Rainier]

1 hour ago, Xerxes said:

I would add ABAXX Technology. 
 

A $1B market cap minnow, that wants to be central exchange for LNGs. 
 

I can across in a podcast few months ago, took mental note; and then completely forgotten about it. 

Thanks. I had never heard of them. Do you know happened in mid-2025 to make the price go parabolic?

[Xerxes]

2 hours ago, Rainier said:

Thanks. I had never heard of them. Do you know happened in mid-2025 to make the price go parabolic?

unfortunately I don’t. 

[Spekulatius]

I bought a bit of BOLSAA recently. Traded at a PE of 10 but the Mexican stock is not exactly Speedy Gonzales.

[winjitsu]

 

Thought this was interesting from Horizon Kinetics Q3 letter (https://horizonkinetics.com/app/uploads/Horizon-Kinetics-Q3-2025-Commentary-Final.pdf) 

 

Taken from a very good substack deep dive into a $MIAX, an exchange in Florida (https://ragingbullinvestments.substack.com/p/a-royalty-on-market-madness) 

Edited January 2 by winjitsu

[formthirteen]

7 hours ago, winjitsu said:

Thought this was interesting from Horizon Kinetics Q3 letter (https://horizonkinetics.com/app/uploads/Horizon-Kinetics-Q3-2025-Commentary-Final.pdf) 

 

Interesting that CME is -0.06% vs SP500. I'm planning on buying more CME. ASX.AX and DB1.DE are near 52-week lows. Anyone know what's going on down under with ASX.AX?

[schin]

7 hours ago, winjitsu said:

 

Thought this was interesting from Horizon Kinetics Q3 letter (https://horizonkinetics.com/app/uploads/Horizon-Kinetics-Q3-2025-Commentary-Final.pdf) 

 

Taken from a very good substack deep dive into a $MIAX, an exchange in Florida (https://ragingbullinvestments.substack.com/p/a-royalty-on-market-madness) 

 

These exchanges are modern day toll booths. Considering the net operating margins, I would think the returns would be better for all the exchanges. Strange.

[KJP]

On 12/30/2025 at 2:05 PM, Rainier said:

Thanks. I had never heard of them. Do you know happened in mid-2025 to make the price go parabolic?

 

For an overview of the history of the Abaxx story and the bull case, you can scroll through this twitter feed:  

 

[Spekulatius]

6 hours ago, schin said:

 

These exchanges are modern day toll booths. Considering the net operating margins, I would think the returns would be better for all the exchanges. Strange.

There is now more competition with exchanges because the electronic nature makes it easier to have multiple exchange coexisting compared to when they were open outcry etc. Also in the same vein, transaction cost go towards zero, so the exchanges need to offer value added services or keep revenue growing. They are still food business but not as good than 25+ year ago.

Edited January 2 by Spekulatius

[schin]

On 1/2/2026 at 4:52 PM, Spekulatius said:

There is now more competition with exchanges because the electronic nature makes it easier to have multiple exchange coexisting compared to when they were open outcry etc. Also in the same vein, transaction cost go towards zero, so the exchanges need to offer value added services or keep revenue growing. They are still food business but not as good than 25+ year ago.

@Spekulatius - Definitely more competition, but when I review Valueline for categories/sectors to invest in, these exchanges seem to be one of the better barrels to fish in.

 

The competition hasn't really affected their gross/net margins. Everyone seems to have their niche. Even the battle between NYSE(ICE) /NASD haven't lead to a race to the bottom.

[Gamecock-YT]

Urbana has majority ownership of the Canadian Securities Exchange that also just merged/purchased a similar second tier Australian exchange. Also has exposure to a 24 hour exchange via Blue Ocean. 
 

Their capital allocation strategy is quite poor, however. 
 

I just randomly walked past the NZX in Wellington in November, would be interesting to follow given their economy is stagnant currently.

[Spekulatius]

$DB1 Deutsche Börse acquisition of Allfunds. Seems like a good deal and shares are up. I bought just a  DB tracker a few days ago because I like what saw. Acquisitions have been a huge driver for stock exchange returns due to cost synergies,

https://www.deutsche-boerse.com/dbg-en/media/news-stories/press-releases/Deutsche-B-rse-Group-and-Allfunds-Group-Sign-Agreement-on-Recommended-Acquisition-of-Allfunds-Group-4914918

[formthirteen]

NDAQ, SPGI, etc, down 10%...

[Saluki]

On 1/2/2026 at 4:52 PM, Spekulatius said:

There is now more competition with exchanges because the electronic nature makes it easier to have multiple exchange coexisting compared to when they were open outcry etc. Also in the same vein, transaction cost go towards zero, so the exchanges need to offer value added services or keep revenue growing. They are still food business but not as good than 25+ year ago.

 

There is a huge difference between securities and commodities/derivatives exchanges.  Securities are fungible and cleared by DTCC, so it doesn't really matter where you execute. Commodities are traded as futures and the contracts are not usually fungible. If one exchange traded Maine Potatoes, you can't deliver Iowa potatoes, just ask Mr Simplot. 

 

Once an exchange like NYMEX has a contract in some commodity like WTI oil, it's hard for someone else to compete on that, so ICE trades Brent crude if I recall. There are 2 big reasons. One is liquidity. Active contracts on an existing exchange have lots of buyer/sellers so the bid/ask is a small and a new exchange would have wider bid/ask and it would be hard to get people to trade on it. The other is different clearing houses. DTCC has all the US securities, but CME Clear clears for CME and ICE Clear does ICE. So if you have positions that are long oil and short gasoline and heating oil, on the same exchange you can get portfolio margining and have to put up a lot less cash for margin. But even if you were long a WTI contract on CME and short the exact same contract on another exchange like ICE, they don't offset each other, so you are incenctized to trade them on the same exchange. 

 

The reason that it's also hard to make inroads is credit quality. Last time I checked CME Clear has a AAA credit rating (which even the US government doesn't have) so when you trade and clear there, and the exchange its substituting it's AAA credit rating for mine, that makes it harder to find a better way to do a trade involving leverage. 

[dealraker]

I have added to London pretty significantly.  News:

 

https://www.reuters.com/sustainability/sustainable-finance-reporting/elliott-management-builds-stake-london-stock-exchange-group-ft-reports-2026-02-11/?utm_medium=Social&utm_source=Facebook

[Marco Van Basten]

2 hours ago, dealraker said:

I have added to London pretty significantly.  News:

 

https://www.reuters.com/sustainability/sustainable-finance-reporting/elliott-management-builds-stake-london-stock-exchange-group-ft-reports-2026-02-11/?utm_medium=Social&utm_source=Facebook

Why?  Are the same fools that bought Refinitiv still running the show?  Thank you.