The S&P 500 hasn’t made a new all-time high since early June, and volatility appears ready to dominate market narratives once again. A dispersion trade, i.e., financial stocks rising when tech stocks fall, has buoyed indices from a sharper decline, but the market is starting to look disjointed as the AI trade emits hiccups.
Who benefits from outsized volatility? Fee-based asset managers and market makers, and three important companies in this industry just reported earnings. If you’re considering a wager on continued volatility, be sure to digest the Q2 reports from these three firms.
Which Market Tollbooth Is Best Suited for Your Portfolio?
Markets are like interstate highways. Most roads are free to traverse, but some charge tolls for various reasons (private ownership, recouping maintenance costs, etc.). In markets, most brokers offer commission-free equity trading, but some assets or services may incur fees.
The companies that offer these assets are often considered ‘market tollbooths’ because investors must pay fees to access them. But offerings vary, and choosing stocks in this vein means choosing which revenue stream you think will have the most value in the future.
MSCI: A Dip Worth Buying as Premium Valuation Resets
MSCI Inc. (NYSE: MSCI) sold off sharply following its fiscal Q2 2026 results on July 21, experiencing a painful 12% pullback in response to a narrow top- and bottom-line miss. Revenue grew more than 12% year-over-year (YOY), and the company reported a new record for assets under management (AUM). The misses were minuscule; earnings per share (EPS) missed analysts’ expectations by approximately 1%, and revenue fell short by just 0.3%. Stocks with premium valuations are frequently punished for the slightest misstep, and management does expect costs to rise in the second half of 2026. But this seems like an overreaction to a business that shows tremendous underlying strength across several key segments.
MSCI has a dual engine revenue model, earning fees from AUM and subscription revenue from its data and analytics streams. In addition to record AUM, MSCI also reported 8.1% growth in organic recurring subscriptions with a retention rate over 95%. However, this highlights an important caveat. The firm earns asset-based fees that increase with inflows and market appreciation, not necessarily volatility. In fact, sustained downward pressure would hinder fee growth even if trading activity remains high, so MSCI wants a steady, uptrending market over a volatile one.
Operating margin (56.2%) and adjusted EBITDA margin (61.4%) both improved from the previous quarter, and the company declared a $2.05-per-share dividend for Q3. The valuation is still premium to the market at 27 times forward earnings, but it has come down from historical highs and looks more like fair value for a company with 61% EBITDA margins and a 95% subscription retention rate.
CME Group: A Q2 Upside Surprise for the Purest Volatility Tollbooth
There’s no better expression of a market tollbooth than CME Group Inc. (NASDAQ: CME), the firm running the Chicago and New York Mercantile Exchanges. Unlike MSCI, which relies on subscription and AUM fees, CME Group generates revenue from trading fees, primarily from futures and options contracts. Derivatives trading volumes tend to ramp up alongside market volatility, and CME Group monetizes that activity regardless of market direction.
CME Group released Q2 2026 results on July 22 and reported the second-highest Q2 in company history in terms of average daily trading volume, popping the stock 5% on the day. Analysts had projected a slight YOY revenue decline, but CME surprised to the upside with $1.71 billion in revenue, surpassing both expectations and Q2 2025 figures. Market data revenue also surged 20% to a record $238 million.
Compared to MSCI, CME has better operating margins (69.5%), a cheaper valuation (21 times earnings), and more generous capital returns (2% yield plus special dividend). But with CME, the concern is a low-activity market, which makes it more earnings-sensitive to volatility than MSCI’s pure participation model.
Nasdaq: Strong Beat for the Most Diversified Market Maker With a Large Caveat
The market saved the best report for last. Nasdaq Inc. (NASDAQ: NDAQ), the company behind the exchange we all know and love, is more than just a market tollbooth. It operates in three segments: Capital Access Platforms, Market Services, and Financial Technology. And in fiscal Q2 2026, all three posted double-digit growth, helping the company smash expectations.
Nasdaq reported quarterly revenue of $2.53 billion, up 14.9% YOY and far above the expected $1.46 billion. EPS of $1.07 also beat estimates by 9%, representing 25.9% growth from Q2 2025. Annualized recurring revenue (ARR) also jumped 12% on an organic basis.
Market Services revenue growth of 11% shows that Nasdaq does monetize market volatility, but this only accounts for roughly 25% of total sales. Capital Access Platforms, which saw 19% YOY revenue growth in Q2, was the largest segment winner, in part due to the unprecedented listing of SpaceX Corp. (NASDAQ: SPCX).
Of course, unprecedented is the keyword here. This listing was the largest IPO in history, a once-a-decade event that won’t be repeated in the near future. However, the FinTech division offers a revenue stream MSCI and CME lack: enterprise software and crime-fighting tools sold to regulators and financial institutions.
Making Sense for Your Portfolio
Nasdaq reported the strongest beat of the three, but the market response was muted due to the outsized impact of the SpaceX IPO. CME shares had the largest post-earnings pop after its beat, as investors bet volatility would continue, while MSCI shares declined after missing sales estimates.
The way forward depends on your market view. If volatility is here to stay, CME Group likely has the highest upside. MSCI is a bet on a return to stability, and you’re paying a premium for the recurring revenue. And finally, Nasdaq is the middle road, with upside on heightened volatility plus a healthy ARR and product mix.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
