Nasdaq OMX Group Inc., the second- largest U.S. equity exchange, said fourth-quarter earnings rose as the company cut costs.
Profit in the three months ended Dec. 31 jumped to $85 million, or 50 cents a share, from $82 million, or 45 cents, in the fourth quarter of 2011. Excluding some costs, New York-based Nasdaq OMX said it earned 64 cents a share, beating the 61-cent average estimate of analysts surveyed by Bloomberg. The stock, which advanced 2 percent in 2012, climbed to a 21-month high in New York yesterday.
Chief Executive Officer Robert Greifeld is re-organizing business units and cutting costs as revenue from trading shrinks around the world. The exchange is expanding into derivatives, setting up a new London-based market and buying a 25 percent stake in a Dutch alternative trading system focused on stocks and equity derivatives.
“Looking to 2013, we are encouraged to see positive, multi-week inflows from retail investors into U.S. equity mutual funds and some signs of improvement in the volume environment,” Greifeld said in the statement today.
Nasdaq OMX’s biggest rival, NYSE Euronext, agreed last month to be acquired by futures bourse IntercontinentalExchange Inc. in a move that underscored the growing importance of derivatives.
For the fourth quarter, operating expenses fell to $244 million from $259 million in the quarter a year ago. Nasdaq said total operating expenses for 2013 will be in the range of $960 million to $990 million including $50 million to $60 million in incremental new initiative spending.
Core operating expenses are forecast to be between $910 million to $930 million. Core costs include $50 million of expenses related to 2012 acquisitions. The company said it expects a 2013 effective tax rate in the range of 34 percent to 37 percent.
Net revenue for the quarter excluding rebates, clearing and other fees was $419 million driven by the corporate solutions business, the company said.
Average daily volume for equities listed on all U.S. exchanges was 6.07 billion shares in the fourth quarter, 18 percent down from a year earlier, according to data compiled by Bloomberg.
Nasdaq OMX received 40 cents per 1,000 shares changing hands in U.S. equities during the fourth quarter, up 2 cents from the prior three months, for the highest level since the first quarter of 2011, the company said in a statement on Jan. 10. Its so-called revenue capture for each U.S. options contract traded was 17 cents, a decline from 18 cents in the third quarter.
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