Nasdaq OMX Group yesterday reported lower fourth-quarter profit before one-time items as the US-based exchange operator was hit by sluggish trading and eroding market share, but results narrowly beat Wall Street expectations.
The Nasdaq Stock Market parent company, which runs equities and derivatives venues in the US and Northern Europe, said revenue from cash equity trading tumbled 43 per cent, reflecting a drop in volume compared with the end of 2008, when the financial crisis sparked a market selloff. Nasdaq OMX’s US equity market share slipped to 24 per cent from 29 per cent a year earlier as alternative venues continued to gain ground.
The upside was the US options business, where its market share rose to 22 per cent from 19 per cent. Excluding one-time items, fourth-quarter profit was 46 cents per share, down from 53 cents a year earlier. Revenue slipped eight per cent to $369m (£236m) but topped analysts’ expectations for $365m. Net income rose 23 per cent to $43m from $35m a year earlier.
Nasdaq OMX shares are off five per cent this year and plunged last month when the Obama administration proposed a crackdown on bank proprietary trading.
The company is sensitive to planned changes in market regulation, which are mostly expected to give it a boost in coming years. “Changing dynamics of our industry are providing numerous growth opportunities,” Nasdaq OMX chief executive Robert Greifeld said in a statement.
A US Securities and Exchange Commission probe of high-frequency trading, new rules for alternative venues known as dark pools, and a regulatory push to run over-the-counter derivatives through exchanges and clearing houses are all expected to benefit Nasdaq OMX.