TEXT-S&P 2013 outlook for global exchanges/clearinghouses
Dec 5 - Declining trading volumes for global exchanges are turning Standard & Poor's Ratings Services' outlook for the industry negative, according to the article, titled "Lower Trading Volumes Will Put Global Exchanges To The Test In 2013 As Clearinghouses Deal With Regulations." "We expect 2012's drop in trading volumes at both stock and derivative exchanges to continue into 2013. This will lower top-line transaction-based revenues and operating cash flows, in our view," said Standard & Poor's credit analyst Charles Rauch. "However, many exchanges have been improving their debt profiles by refinancing or prefunding near-term debt maturities, which could help to offset their potentially weaker operating results." "For clearinghouses, high-quality collateral is increasingly becoming a scarce resource. As a result, some are offering collateral management services, which can boost revenue," said Standard & Poor's credit analyst Giles Edwards. "However, other clearinghouses are accepting lower-quality collateral and offering cross-margining services, which could put them at risk of not having sufficient collateral to cover losses if a member defaults." At the same time, national regulators in the U.S. and Europe are calling on systemically important clearinghouses to boost their financial safeguards and capitalization as mandatory over-the-counter clearing comes into effect. We expect that clearinghouses we rate will soon meet these tougher standards and that these developments will generally support ratings. Since the beginning of 2012, Standard & Poor's has taken a number of rating or outlook actions on global exchanges and clearinghouses, most of them negative. Nevertheless, the industry remains highly rated relative to other sectors (such as commercial banks, securities firms, and asset managers) in the financial services industry. We rate more than two-thirds of the 17 publicly rated companies in the 'AA' and 'A' rating categories, and we rate only one company speculative grade. The report is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to email@example.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com.