On September 10, StoneX Group (NASDAQ:SNEX) and DeltaTerra Investments rolled out a synthetic credit structure built around Agency mortgage bonds issued through Fannie Mae’s Connecticut Avenue Securities program and Freddie Mac’s Structured Agency Credit Risk program. The deal lets institutional investors get exposure to that credit risk through a credit default swap instead of buying the underlying bonds outright. It lands just weeks after StoneX posted a blowout quarter, with net operating revenue up sharply and net income more than doubling. The two stories, a new product launch and a strong earnings print, are more connected than they first appear.
A Business Firing On Every Cylinder
StoneX’s fiscal third quarter showed growth almost everywhere. Net operating revenues climbed 47% year over year to $719.7 million, and net income more than doubled to $127.9 million, pushing diluted earnings per share to $1.00. Return on equity rose to 18.4% from 13.1% a year earlier, a sign the extra capital StoneX has been putting to work is generating better returns rather than just padding the balance sheet.
The Commercial and Institutional segments did the heavy lifting. Commercial segment income jumped 119% to $181.4 million, while Institutional income rose 49% to $129.9 million, helped by a 73% jump in listed derivatives contract volumes company-wide. CEO Philip Smith pointed to the integration of the R.J. O’Brien acquisition as a driver of that strength, and the numbers back him up: StoneX now describes itself as the largest non-bank futures commission merchant around. Net asset value per share climbed to $23.70 from $20.25 over nine months, so the balance sheet is compounding alongside the income statement.
The DeltaTerra transaction fits the same growth story. Rather than just brokering trades, StoneX designed a structure for transferring Agency credit risk and positioned itself as the advisor behind a new corner of the mortgage market. With roughly $19 billion of CRT bonds becoming callable by the end of the third quarter of 2027, StoneX has built a product aimed at a market event that is already on the calendar.
Where The Growth Gets Expensive
Not every part of the business is expanding. The Self-Directed/Retail segment went the other direction, with operating revenue falling 13% to $96.3 million and segment income dropping 36% to $24.9 million, as principal gains and consulting fees both declined. That is a reminder that StoneX’s growth is concentrated in its institutional and commercial trading businesses rather than spread evenly across the company.