NYX Nyse Euronext

TAKING THE PULSE: An increased appetite for mergers has shaken up the exchange sector, highlighted by NYSE Euronext's (NYX) pending blockbuster combination with Deutsche Boerse AG (DB1.XE), while Nasdaq OMX (NDAQ) is left to consider other possible merger partners following its own failed bid for NYSE.

Meanwhile, volume spikes seen during the "flash crash" in May 2010 will create tough year-over-year volume comparisons for the exchanges. Further, Raymond James analysts note the second quarter witnessed the lowest quarterly average daily volume for U.S. equities since the fourth quarter of 2007, placing greater emphasis on exchange groups' push to diversify through derivatives.

 
    COMPANIES TO WATCH: 
 
    Nasdaq OMX Group Inc. (NDAQ) - reports July 27 
 

Wall Street Expectations: Analysts most recently forecast earnings of 60 cents a share on revenue of $413 million, according to Thomson Reuters. Nasdaq reported an adjusted per-share profit of 52 cents on $390 million in revenue in the same period a year ago.

Key Issues: After abandoning its pursuit of rival NYSE Euronext in May, Nasdaq appears to be still on the hunt for a merger. Earlier this month, The Wall Street Journal reported Nasdaq was considering its second approach to the London Stock Exchange in five years, after LSE's own proposed tie-up with Canada's TMX Group Inc. (X.T) fell through in June. Nasdaq also has entered a bid for London-based clearing firm LCH.Clearnet. LCH.Clearnet is still considering that offer. Meanwhile, Nasdaq has retained its leadership in U.S. options trade and drawn more investors to its European stock markets.

 
    CME Group Inc. (CME) - reports July 28 
 

Wall Street Expectations: Analysts most recently forecast earnings per share of $4.17 on revenue of $821 million. The company reported an adjusted per-share profit of $4.43 on $813.9 million in revenue in the year-ago period.

Key Issues: Festering debt problems facing euro-zone nations lured more firms to hedge interest-rate risk in CME's futures markets over the second quarter, helping the world's largest futures exchange top levels seen amid the flash crash of last year's second quarter.

Rising trade in commodities and metals contracts stacked up against was offset by an 18% drop in stock-index futures trading and a dip in forex contracts, where CME faces a new competitor in IntercontinentalExchange Inc. (ICE). CME executives may field more questions on consolidation this quarter, but the company is likely to reiterate a preference for organic growth--which is looking more like a wise choice following several high-profile exchange deal failures.

 
    NYSE Euronext (NYX) - reports Aug. 2 
 

Wall Street Expectations: Analysts most recently forecast earnings per share of 60 cents on revenue of $653 million. The company reported an adjusted per-share profit of 64 cents on $654 million in net revenue in the same quarter a year ago.

Key Issues: With shareholder support for its tie-up with Deutsche Boerse now in hand, NYSE is turning its focus to what many expect will be a lengthy regulatory review process. Meanwhile a protracted slowdown in stock trade in both the U.S. and Europe means that the Big Board parent will rely on its U.S. options and U.K. futures divisions to support second-quarter results. A rise in volatility over the quarter drove more investors to hedge with options contracts, while futures volumes climbed from first-quarter levels.

 
    IntercontinentalExchange Inc. (ICE) - reports Aug. 3 
 

Wall Street Expectations: Analysts most recently forecast earnings of $1.66 a share on revenue of $323 million. The company reported an adjusted per-share profit of $1.51 on $296.2 million in revenue a year earlier.

Key Issues: Growth in the energy-focused derivatives markets run by ICE continued to outpace peers over the second quarter, with European trade rising an estimated 10% from year-ago levels and leading growth in the company's smaller U.S. markets in soft commodities and currencies.

Some analysts have flagged a decline in outstanding crude oil trades as a potential trouble sign for ICE's most popular market. Watch for executives to address the issue, as well as feelings toward dealmaking after regulators blocked ICE's and Nasdaq's joint bid for NYSE Euronext. This month ICE took a 12% stake in a Brazilian trade-clearing unit, underscoring ICE's efforts to further expand into overseas commodity markets.

 
    CBOE Holdings Inc. (CBOE) - reports Aug. 4 
 

Wall Street Expectations: Analysts most recently forecast earnings of 33 cents a share on revenue of $119 million. The company reported a per-share profit of 27 cents on $112.6 million in revenue in the year-ago quarter.

Key Issues: Strong trade in the Chicago Board Options Exchange's stock-index options franchise has helped as rivals continue to chip away at CBOE's business in options on individual stocks and exchange-traded funds. The company's new all-electronic C2 exchange has drawn more business, but CBOE's overall equity option market share fell to about 22% from 26.5% a year ago. As the smallest publicly traded exchange company in the U.S., CBOE continues to be seen as a potential acquisition candidate, with its largest investor in June estimating that CBOE could fetch $45 a share if it is bought.

(The Thomson Reuters estimate and year-ago figures may not be comparable due to one-time items and other adjustments.)

-By Mia Lamar and Jacob Bunge, Dow Jones Newswires; 212-416-3207; mia.lamar@dowjones.com

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