NYSE 3Q Profits More Than Triple

NEW YORK — The operator of the New York Stock Exchange said Friday its third-quarter profit more than tripled as market volatility over the summer produced record volume.

NYSE Euronext, the product of the New York Stock Exchange's April acquisition of European rival Euronext, saw earnings surge to $258 million, or 97 cents per share, for the quarter ended Sept. 30 from $68 million, or 43 cents per share, a year earlier.

Excluding costs such as those tied to the acquisitions of Euronext and Archipelago, as well as a gain on the sale of member firm regulatory functions, the company earned $202 million, or 76 cents per share.

Revenue jumped to $1.2 billion from $602 million a year ago, with 25 percent of total revenue generated by trading of derivatives, and 18 percent from European cash trading.

Analysts surveyed by Thomson Financial expected profits excluding items of 73 cents per share.

NYSE Euronext, which operates exchanges in New York, Paris, Amsterdam, Brussels and Lisbon, said improved results owed to spiking trading volumes in the U.S. and Europe and efforts to control costs.

The jumps seen in the third quarter over unease about the health of the credit markets drove nervous investors to make changes to their portfolios and prompted institutional investors to try to avoid investments that might be hurt by failing subprime mortgages, those made to borrowers with poor credit.

"When there is a dislocation in the markets, it's actually good for us," said Chief Financial Officer Nelson Chai.

NYSE Euronext rival Nasdaq Stock Market Inc. last week reported that fresh highs in trading volume helped drive results.

NYSE Euronext, like other exchanges, is forced to keep ahead of rising volume. The company said Thursday it plans to boost its capacity for handling buy and sell orders to 64,000 per second from 38,000 per second where it now stands. So-called messaging capacity was at 25,000 per second at the start of the year.

"Message traffic has continued to increase," Chai said. "History would suggest that the markets will continue to show growth."

He said the company, which recently won permission to set up an office in Beijing to examine opportunities in China, will continue to look abroad as exchanges race to lock up market share and extend their reach globally.

"We'll be trying to continue to augment our derivatives strategy and then you'll see us continue to be very active in Asia," Chai told The Associated Press, referencing markets such as India, China and Japan.

He cautioned, however, that the NYSE wouldn't let zeal to snap up exchanges lead the exchange to overpay.

"The pace of globalization has really accelerated and I think you're starting to see that and people are trying to play catch-up," he said of players in the exchange space. "Opportunities come up and certainly we are aware of them. We take a pretty rigorous view of the market," he said. "We have to deliver shareholder value."

The exchange plans to continue its focus on derivatives. Revenue drawn from derivatives — a business already in place at Euronext — jumped to $243 million from $9 million a year earlier.

In addition, the exchange's cash trading operation saw revenue surge to $466 million from $171 million a year earlier.

Looking ahead, the exchange also estimates it will be able to extract greater cost savings than it previously forecast as it finds ways to cut costs following its tie-up with NYSE and Euronext as well as from overall technology savings.

NYSE Euronext closed down 45 cents at $90.46 Friday.

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Associated Press Writer Toby Anderson contributed to this report from London.

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