NYSE flaunts its derivatives profits at ICE

STOCK exchange group NYSE Euronext yesterday showed why it is being bought for $8.2bn (£5.3bn), as it posted a strong rise in profits driven by its European derivatives business.

IntercontinentalExchange (ICE) agreed to buy the business last December, mainly to get its hands on the 221-year-old company’s relatively youthful NYSE Liffe derivatives business.

Yesterday their decision appeared to be vindicated, as NYSE’s results revealed that revenues from derivatives hit $201m in the first three months of 2013, up $27m on the same period last year.

Higher trading volumes drove the improvement.

Total group profits hit $126m for the first quarter, up from $87m as cost-cutting measures took effect. The company is almost two-thirds of the way towards its target of reducing bills by $250m by 2014.

“Our first quarter results reflected improved trading volumes in our European derivatives franchise and the benefit of the actions we have taken to strengthen the fundamental earnings power of the company over the past year,” said NYSE chief executive Duncan L. Niederauer.

He said he expected Atlanta-based ICE’s cash-and-shares takeover deal to be put to shareholders in June following approval from regulators.

NYSE’s traditional equities business has struggled in comparison to its derivatives arm, with trading volumes falling for three straight years.

US cash share purchases fell by 13 per cent to 1.5bn in the quarter, while the number of transactions on its much smaller European markets also fell 13 per cent to 1.4m trades.