Exchanges & Financial Data covers stock, futures and options exchanges, electronic bond marketplaces, credit-rating agencies, index providers, credit bureaus and financial-research firms. MoatScope covers 23 companies here. Twelve have a wide moat, four a narrow moat and seven none, so more than half of the industry is wide-moat rated, a concentration of strong franchises found almost nowhere else.
How the industry makes money
These companies earn fees on the infrastructure of finance rather than taking market risk themselves. Exchanges such as CME, Intercontinental Exchange and Nasdaq charge for trading, clearing and market data. Tradeweb and MarketAxess run electronic marketplaces where institutional investors and dealers trade bonds and other fixed-income products. S&P Global and Moody's are paid to rate debt, MSCI licenses the indexes that funds track, and Equifax, TransUnion and FICO supply the credit files and scores behind lending decisions.
Where the moats are
Switching costs appear in 14 of the 16 moat-rated companies and network effects in 11. In trading, liquidity begets liquidity: buyers and sellers go where the other side already is. In ratings, indexes and credit scores, a standard gains value the more it is written into regulations, contracts and investment products.
- CME, Intercontinental Exchange and Nasdaq: trading venues where liquidity and clearing relationships reinforce each other; in its core futures franchises, CME faces little real competition.
- S&P Global and Moody's: a regulator-recognized ratings duopoly, alongside data and index businesses.
- MSCI: an index oligopoly in which a benchmark becomes more valuable as more money tracks it.
- Tradeweb and MarketAxess: electronic bond marketplaces that grow more useful as more institutions trade on them.
- FICO, Equifax and TransUnion: the credit score written into lending workflows and securitization documents, and the bureaus of a durable three-firm oligopoly.
- Morningstar: investment research, ratings, indexes and the platforms advisers and institutions work in.
Cboe and FactSet are among the narrow-moat companies. Most of the companies without a moat are smaller brokerage and trading firms.
What wears moats down
Trading volumes rise and fall with market activity, so exchange revenue is cyclical even when the franchise is secure. Regulators can open room for alternative ratings or credit scores, large customers push back on fees for data and indexes, and credit bureaus carry the constant risk of a data breach.
What the quality scores say
The wide-moat companies score between 57 and 79 on MoatScope's quality scale, and the industry averages 54.
What to watch
- Trading volumes and volatility across futures, options and bonds.
- The share of bond trading that moves onto electronic platforms.
- Regulatory decisions on credit scores and ratings.
- Fee pressure on index licensing as passive investing grows.
Moat ratings and quality scores on this page update as companies report. Price versus fair value for every company in the industry is in the screener.