· The CME is the most valuable stock exchange brand with a value of US$1.7 billion
· The NYSE is second in terms of brand value, but is the most powerful brand
· SGX anticipates further benefits from the Baltic Exchange transaction
For the first time, the brand values of the world’s biggest exchanges have been calculated and ranked, showing the often overlooked role that brands can play in the world’s financial markets. The list has been created by leading valuation and strategy consultancy Brand Finance, which evaluates thousands of brands from all industries every year. The most valuable exchange brands can be found in the Brand Finance Exchanges 20.
One quarter of the brands in the table are United States-based, though with a combined value of US$4.7 billion, they make up nearly half the total value of the top 20 (US$9.7 billion). The United Kingdom and Germany are home to three exchange brands each, with total values of US$991 million and US$983 million, respectively.
CME is the most valuable and fastest growing exchange brand, its value increasing 32% to US$1.7 billion. This is largely due to the impressive year on year growth in four of its six product lines. Furthermore, CME has boosted efforts to expand its core exchange business via strategic alliances and acquisitions, new product initiatives and increased global presence. The second most valuable is the NYSE with a value of US$1.3 billion. With an AAA rating, it is also the most powerful exchange brand, its status boosted by the recent acquisition of Interactive Data Corp (IDC), allowing NYSE to offer pricing data on corporate bonds.
The HKEx is the third most valuable exchange brand. The 11% dip in value to US$1.1 billion is partially due to the decline across all major revenue drivers. As a result of the weakening Chinese economy, HKEx’s equities experienced a decrease, negatively affecting brand value. In contrast, the only other East Asian brand in the table, the SGX, rose 21% to a value of US$380 million, making it the second fastest growing brand this year. In 2015, it was named the Global Exchange of the Year for the first time. SGX’s forthcoming acquisition of the Baltic Exchange is intended to position Singapore as a hub for shipping finance. Despite the recent slump in shipping due to oversupply and falling commodity prices, we can expect the brand value of SGX to rise again next year.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes over 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.