TMXXF - CME Tradeweb MarketAxess nab Overweight ratings at Barclays

2023-06-28 11:15:33 ET

Barclays analyst Benjamin Budish on Wednesday initiated coverage of six exchanges based on secular trends and valuation, with CME Group ( NASDAQ: CME ), MarketAxess Holdings ( NASDAQ: MKTX ) and Tradeweb Markets ( NASDAQ: TW ) at Overweight and Intercontinental Exchange ( NYSE: ICE ), Cboe Global Markets ( BATS: CBOE ) and TMX Group ( OTCPK:TMXXF ) ( TSX: X:CA ) at Equal Weight.

Overall, Budish sees "varying degrees of attractiveness based on maturity and intensity of competition," he wrote in a note, favoring fixed income trading, followed by futures, options and stocks.

Within his coverage, Tradeweb ( TW ) and MarketAxess ( MKTX ) are the the best ways to invest in "the electronification of fixed income trading."

"At the same time, we think the higher-rate environment is likely to spur greater investing interest, in general, in fixed income, and the ongoing evolution and adoption of automated trading protocols could spur greater velocity (i.e., turnover), also contributing to volume growth over time."

For CME ( CME ), which is less exposed to longer-term themes than MKTX and TW, the derivatives exchange "has very strong competitive moats in its futures markets, and we see the valuation premium vs. the other exchanges at its narrowest in several years," the sells-side analyst said.

And while CBOE, ICE and TMX are high-quality businesses with high operating margins, "lack of exposure to trends and valuation keep us on the sidelines."

SA's stock screener of exchanges ranked crypto exchange Coinbase ( COIN ) with the highest Quant rating.

More on exchanges:

• CME Group: A Good Defensive Financial Pick
• Cboe: Muted Growth Prospects
• MarketAxess Is Poised To Capture Broad-Based Capital Market Growth
• Intercontinental Exchange: NYSE Owner Leads In Data But Held Back By High Valuation

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