Nasdaq OMX Group 3Q Profit Rises on Cost Cuts

Global exchange operator Nasdaq OMX Group Inc. said Thursday its profit rose as it cut costs and recorded fewer special charges during the third quarter.

FILE - In this Oct. 24, 2008 file photo, a man watches stock prices at the Nasdaq MarketSite in New...

FILE - In this Oct. 24, 2008 file photo, a man watches stock prices at the Nasdaq MarketSite in New York's Times Square. Global exchange operator Nasdaq OMX Group said Thursday, Nov. 5, 2009, its third-quarter profit edged higher amid cost cutting and fewer special charges. (AP Photo/Mark Lennihan, file)

(AP)

Amid an increasingly competitive marketplace, Nasdaq OMX's revenue dipped 10 percent. However, it was able to offset some of that decline by reducing costs.

The New York-based exchange operator also recorded fewer special charges during the quarter which helped its profit rise about 3 percent.

Nasdaq OMX earned $60 million, or 28 cents per share, during the quarter ended Sept. 30. It earned $58 million, or 27 cents per share, during the year-ago period.

Adjusted earnings, which exclude special charges tied to a debt conversion, asset retirement, severance costs and merger expenses, totaled $89 million, or 42 cents per share, during the most recent quarter. Nasdaq OMX's adjusted earnings during the same quarter in 2008 totaled $108 million, or 51 cents per share.

Analysts polled by Thomson Reuters, on average, forecast earnings of 42 cents per share on revenue of $354.9 million. Analysts do not typically include special charges in their estimates.

Nasdaq OMX's total revenue after liquidity rebates and fees fell to $349 million from $399 million, during the year-ago period. A sharp decline in revenue tied to U.S. cash equity trading was the main reason for the overall decline in revenue.

Net revenue from U.S. cash equity trading fell to $24 million from $66 million during the third quarter last year. The revenue fell because the volume of trading handled by Nasdaq OMX continues to slip as the number of brokers using exchanges to handle trades declines.

In recent years, smaller liquidity providers and market-making firms have been making inroads into gaining trading volume at the expenses of the primary exchanges like Nasdaq OMX and NYSE Euronext.

The added competition has also driven fee revenue down on top of the decline in volume. Lower average net fee per traded share also attributed to the decline in Nasdaq's U.S. equity-related revenue during the third quarter.