Lower taxes, charges boost Nasdaq OMX profit

Nasdaq OMX Group's revenue fell as trading activity declined and the exchange operator continued to face market competition. Rival trading platforms launched in recent years have eaten away at market share held by long-standing exchange operators like Nasdaq OMX and NYSE Euronext. The added players also have pressured fees generated from handling trades.

During the fourth quarter, 20.6 percent of U.S.-listed equities trading volume was executed on Nasdaq OMX Group's trading platform, down from 29.2 percent in the final quarter of 2008. Total volume fell 36 percent to 126.1 billion shares.

The company, however, did see some stabilization in market share from the 2009 third quarter and its options business delivered a strong performance. Its share of the U.S. equities market rose to 24 percent from 22 percent in the third quarter. Nasdaq OMX said January started slowly but volumes and market share bounced back to early fourth-quarter levels and Chairman and CEO Bob Greifeld said February is “looking even better.”

“We're happy with the share gains in the fourth quarter,” Greifeld said on a conference call with analysts Monday.

Separately, Greifeld said it would be a “hard job” for the government to sort out banks' proprietary trading from customer activity — referencing President Barack Obama's proposal last month to restrict large bank holding companies that combine commercial and investment banking from carrying out their own high-risk bets. The idea — which would affect some of Nasdaq's customers — has been pushed by Obama adviser and former Federal Reserve Board Chairman Paul Volcker.

The company's net income for the final three months of 2009 rose 23 percent to US$43 million, or 20 cents per share, from US$35 million, or 17 cents per share, a year ago. Nasdaq OMX paid just US$10 million in income taxes, down from US$38 million a year earlier.

Excluding one-time impairment charges and gains on the sales of certain businesses, Nasdaq OMX Group earned US$99 million, or 46 cents per share, in the latest period — down 10 percent year-over-year.

Net revenue, which is total revenue less rebates, brokerage, clearance and exchange fees, fell to US$369 million from US$403 million during the final quarter of 2008. Transaction revenue slid 17 percent to US$150 million.

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