NYSE Euronext profit off as trading slumps

City A.M. Reporter

Euronext quarterly profit dropped 12 per cent on a global slowdown in share trading, but the results were better than expected and the trans-Atlantic exchange operator said it would continue its joint-venture approach to any new swaps ventures.

Management stressed that trading was unusually quiet in the third quarter and said this was unlikely to continue into next year, when the company’s US clearinghouse for Treasury and interest-rate futures is expected to launch.

Equites trading and listings revenue dropped nine per cent from a year earlier, while derivatives revenue was off five per cent.

The weakness reflected the slowest US stock-trading period since the second quarter of 2008 – just before the financial crisis – as well as intense competition from broker-run alternative trading venues in both Europe and the United States .

“It’s hard for us to imagine that people will just continue to stay out of the listed equity and derivative markets to the degree they have in the last few months,” NYSE Euronext chief executive Duncan Niederauer said on a conference call with analysts and media.

“We’re cautiously optimistic that 2011 will look a lot brighter.”

NYSE Euronext confirmed that its co-owned US clearinghouse, called New York Portfolio Clearing, is expected to launch in the first quarter of 2011.

That, along with plans to self-clear shares and derivatives in Paris and London, should help the company compete to clear over-the-counter swaps over the next 12 to 18 months, Niederauer said.

The company will likely partner with big market participants in any new swaps trading ventures, he said, pointing to “semi-mutualised” ventures it has entered into in the past with big broker dealers. “You can safely assume we're already having conversations around that vein,” he said.