2nd UPDATE: NYSE Euronext Sees Delay For U.S. Futures Push
03 Agosto 2010 - 5:38PM
Dow Jones News
The head of NYSE Euronext (NYX) said Tuesday that an expansion
of its U.S. derivatives business will likely be delayed until 2011
due to a regulatory logjam triggered by sweeping financial
reforms.
Duncan Niederauer, chief executive, said it may be January
before its U.S. futures arm can launch new interest-rate products
because regulators have to first approve its plans for a new
clearinghouse.
NYSE Euronext had planned to introduce the new products in the
third quarter, but U.S. regulators are weighing new rules in the
wake of the May 6 "flash crash," while preparing to craft hundreds
of new regulations called for in the financial overhaul bill signed
into law last month.
Niederauer said on a conference call that in spite of the
slower-than-expected approval process for the venture, new
financial legislation will provide a long-term benefit as more
trading migrates toward exchanges and clearinghouses.
The company reported a $184 million profit for the second
quarter Tuesday, buoyed by asset sales alongside record trade in
its U.S. options and U.K. futures franchises, which now make up
almost half of operating income.
"We're growing our derivatives business, stabilizing our cash
equities business, and providing innovative technology solutions,"
said Niederauer.
Market volatility during April and May lifted trading volume
across the exchange sector, though activity has tailed away in July
and August.
NYSE Euronext, which owns the New York Stock Exchange and four
European stock exchanges, has diversified from its traditional
focus on cash equities by expanding its derivatives business and
bolstering a technology unit selling services to traders and other
exchanges.
Key to the U.S. effort is New York Portfolio Clearing, a new
venture developed by NYSE Euronext and the Depository Trust and
Clearing Corporation that will handle rate futures listed on the
still-small NYSE Liffe US market.
Systems for the NYPC platform are on track, Niederauer said, as
the platform awaits regulators' blessing.
New rules aimed at shifting off-exchange transactions into
clearinghouses and electronic trading platforms open up new
possibilities for NYSE Euronext to develop market data and clearing
services, Niederauer said.
NYSE Euronext's second quarter profit compared with a year-ago
loss of $182 million weighed on by merger and restructuring costs.
Earnings per share of 70 cents beat market expectations and
compared with a 70-cent loss a year earlier.
NYSE Euronext shares recently were up 0.8% at $30.19, lifted by
the upside surprise and full-year cost guidance trimmed by positive
currency effects.
Revenue and operating profit from its cash equities and listings
unit fell from a year earlier, though was up from the first quarter
of 2010.
The company is developing new data centers in New Jersey and the
London area, underpinning a raft of products and services NYSE
Euronext seeks to sell to trading firms and other market
participants.
Niederauer said Tuesday that 80% of revenues in its technology
business is "recurring," and the company expects it to contribute
$1 billion in revenues within three to five years.
For the quarter, NYSE Euronext recorded a net pre-tax gain of
$54 million from asset disposals, primarily tied to the sale of a
5% stake in India's National Stock Exchange for $175 million, after
NYSE Euronext saw limited opportunities for joint business
growth.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com
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