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NYSE Euronext Profit Soars on Volume

The Big Board operator continued the trend of exchange operators posting big profits on spiking trading volume.

Big Board operator

NYSE Euronext


on Tuesday reported soaring trading volumes enabled it to easily beat analysts' expectations.

Excluding merger expenses and exit costs, the exchange reported a profit of $241 million, or 91 cents per diluted share, a 53% increase over the net income of $158 million, or 60 cents per diluted share, NYSE and Euronext earned as separate companies prior to their merger in the year-ago quarter. Analysts had forecast 83 cents per share, according to Thomson Reuters.

Trading volumes pushed the exchange to quarterly records with 103 million transactions and 191 billion shares traded in the U.S. Group markets also set new trading records, including the second and sixth most active days. NYSE Arca Options experienced volume growth of 70% during the first quarter of 2008, vs. the previous year's quarter.

"We are very pleased with the growth in our transaction-related revenues, which underscores our leadership position in an increasingly competitive environment," CEO Duncan Niederauer said in a company statement.

NYSE Arca Options' share of trading in equity option contracts increased 1.8 percentage points to 14.5% during the first quarter, compared to the same period a year ago. The options business has become very competitive with many electronic communication networks like Instinet claiming market share.

NYSE also scored a win on the listings front, snagging the big prize of


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, which began trading on March 19. It was the largest initial public offering in U.S. history and the third largest IPO worldwide. "Our brand name is the winner," Niederauer said on a conference call. "But, it is competitive so we plan to offer more services to our listing customers."

The company continues to digest all the moves it has made over the past year. Cost savings had surpassed the original target of $50 million and instead generated $70 million, not including the elimination of Aims margin that will occur in August of 2008. Conversations are ongoing to reposition the European clearing business and it is proceeding with its acquisition of the American Stock Exchange, its smaller rival. The NYSE expects to generate proceeds from the sale of the Amex building. The company is also moving forward with plans to enter into the India commodity exchange and is just waiting on a couple of regulatory items.

On the conference call, Niederauer said the company plans to consolidate Amex traders both on its existing floors and other rooms that are not currently being used for trading. Other NYSE personnel will move off the floor.

"We've already consolidated into the two larger rooms and we're not about to turn this into a remote business," Niederauer said. "As we do the Amex transaction, we could move the micro- and small-cap market into one room, probably by late 2008. One of the smaller rooms will be the footprint for the small options floor, maybe early 2009. More people will be coming to the building, not less."

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He also noted that the exchange continues to work with regulators to get rules passed to adjust to new technology. The company wants to evolve the specialist role and give more functionality to the floor traders.

The board authorized a repurchase of $1 billion in stock and had recently approved of a 20% increase in the dividend. The stock recently was up 4.6% to $71.20.

Other exchange operators, including

CME Group

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Nymex Holdings



InterContinental Exchange

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also have reported record volumes boosting results in the first quarter.

Nasdaq OMX Group


reports results on Thursday.