Nasdaq OMX profits soar in surprise jump
NASDAQ Group posted a profit rise of nearly 40 per cent yesterday on the back of a sharp jump in stock and option trading, beating expectations.
Transaction revenues rose a surprising 20 per cent from a year ago, reflecting the volatility and volumes brought on by the May “flash crash” and overall concern over Europe’s debt woes.
In the second quarter, the trans-Atlantic market operator earned $96m (£62m), or 46 cents per share, up from $69m, or 33 cents a share, a year ago.
Adjusted earnings were 52 cents a share, compared with the analysts’ estimates of 49 cents a share, Revenue was up 6.3 per cent at $390m.
Nasdaq OMX, which also runs exchanges in Northern Europe, has mostly stabilised its share of the US stock market and reached a record share in options, at more than 20 per cent apiece.
The company’s growth partly hinges on its ability to clear interest rate swaps, capitalising on the global regulatory push to run derivatives through clearinghouses such as Nasdaq OMX’s nascent, majority-owned International Derivatives Clearing Group (IDCG).
“We have committed players who are putting real open interest into the clearing house,” chief executive Robert Greifeld said of the clearer. “We’ve had several trades, and we expect several more this week.”
IDCG cleared 60 contracts this month, according to its website.
The chief executive added that since US President Barack Obama signed the Wall Street reform bill last week, talks “increased dramatically” with swaps dealers and others. He suggested the product offering will be adjusted at IDCG, which was expected to launch this quarter, and will face competition from CME Group and London-based LCH. Clearnet.“They’re in the running and in a good position to clear interest rate swaps, but there could be multiple players,” said Sandler O’Neill analyst Rich Repetto.
The company’s shares are still off more than 13 per cent from an April high, as fears of a double-dip slump hit markets. The dip allowed Nasdaq OMX to buy back $200m worth of shares; it now plans to repurchase $400m in total.