Volume is not revenue
In any trading business, volume is the number everyone watches. It’s large, it’s easy to quote, and it moves every day. It is also a poor proxy for how the business is doing.
Revenue is volume multiplied by what you keep on each dollar traded, usually quoted in basis points. Two weeks with identical volume can produce very different revenue, and the reasons are almost always in the mix.
What sits inside the rate
- Who traded. Large clients negotiate lower fees. When they have an active week, volume jumps and the blended rate falls.
- How they traded. Orders that take liquidity and orders that provide it are priced differently. So are different products and order types.
- What they traded. Spreads differ by instrument. A shift toward the most liquid pairs usually means more volume at thinner margins.
- Where it was executed. Routing changes costs, and costs come out of what you keep.
Decompose before you explain
When revenue moves, I split the change into three parts: the part due to volume, the part due to rate, and the part due to mix. It is the same price, volume, and mix analysis a finance team runs on any product line. It turns “revenue was down” into a sentence someone can act on.
Report them together
A volume chart on its own invites the wrong celebration. I’d put volume, revenue, and the blended rate on the same page every time, so that a record week with a collapsing rate looks like what it is.
None of this is specific to one market. It applies wherever you earn a small percentage of a large flow.
Opinions are my own, not my employer’s, and nothing here is investment advice.