· CME continues to dominate as world’s most valuable exchange brand, with brand value of US$1.9 billion
· US exchanges account for four of top five in ranking
· ICE expansion improves brand value, up 35% to US$1.1 billion
· Germany’s Eurex only brand to decline in brand value, but remains in top 10
· NYSE is sector’s strongest brand, scoring 78.6 out of 100
CME defends top position
CME remains the most valuable brand among the world’s leading exchanges, improving its brand value by 39% to US$1.9 billion, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy.
This substantial increase in brand value, following a 1% drop in 2018, is the result of CME’s focus on new areas of opportunity, innovation and diversification including: the renewed popularity of futures contracts; new opportunities embraced in the market, most notably the trading of Bitcoin futures; and their acquisition of Britain’s NEX Group (formerly ICAP) for US$5.5 billion.
David Haigh, CEO of Brand Finance, commented:
"The industry is increasingly embracing diversification to future proof the business models of exchanges. With cutting edge technology creating new and exciting avenues of opportunity, this trend will undoubtedly accelerate in the coming years.”
HKEX disrupts US dominance
US exchanges account for four of the top five placings, the exception being HKEX, which is ranked second with a brand value of US$1.4 billion, rising 45%. HKEX is the fastest-growing exchange brand this year, pushing NYSE down to third. HKEX’s growth can be attributed to high forecast growth rates, with several Chinese brands looking to float.
HKEX is the owner of the Hong Kong Stock Exchange, the leading market for IPOs. The introduction of electronic IPOs, resulting in the removal of paper transactions, underlines the exchange’s continued reform programme. This initiative has enabled the exchange to reclaim its position as the leading IPO platform as it has increased the focus on technology and biotech companies. HKEX has also eyed the possibility of acquiring blockchain companies.
ICE expansion improves ranking
ICE, ranked fourth up from fifth last year with brand value up 5% to US$1.1 billion, has been active in expanding its business over the past year. In April 2018, it announced that it was acquiring the Chicago Stock Exchange, a full-service stock exchange including trading, data and a corporate listings service. In late 2018, ICE acquired the remaining equity of Merscorp, a national electronic registry, of which it already owned a majority equity interest from 2016. Additionally, ICE entered into an agreement to acquire TMC Bonds LLC - a fixed income market alternative trading system.
These types of acquisitions are being seen more frequently across the industry, allowing brands to integrate more segments of the sector into their business; however, this raises the challenge of how to best utilise the brand equity held in the portfolio to drive value to the business in the future.
The only brand among the top 10 to see its brand value decline was Germany’s Eurex, despite its bid to expand its offering with a broader partnership programme that includes repo and OTC foreign exchange segments. Despite this, the brand still maintains its 7th ranking with a brand value of US$442 million.
NYSE secures strongest brand rating
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
NYSE (up 28% to US$1.4 billion) has secured the highest Brand Strength Index (BSI) score of 78.6 out of 100 and is one of only two exchanges to receive a AA+ rating. The other one, SGX (up 6% to US$350 million) has the second strongest brand with a BSI score of 75.4 out of 100.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest exchange brands. The 10 most valuable exchange brands in the world are included in the Brand Finance Exchanges 10 2019 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Exchanges 10 2019 report.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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 nearly 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.