Deutsche Boerse mulls cost cuts to offset trading slump-sources

FRANKFURT Wed Jan 23, 2013 9:29am EST

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FRANKFURT Jan 23 (Reuters) - German stock and derivatives exchange operator Deutsche Boerse is mulling another round of cost cuts to offset a slump in trading volumes, four sources familiar with the company's thinking said on Wednesday.

"The scale of cuts has yet to be formally decided," one of the sources said.

Lower market volatility and a structural shift in the industry have dented trading volumes. Higher capital requirements for bank trading operations have led to a fall in transactions.

Deutsche Boerse declined to comment.

A formal discussion between the management board and supervisory board about the need for further cost savings is expected to occur in mid February, the source said.

Once the scale of cost cuts is clear, Deutsche Boerse can decide what steps are needed, the source said. It is not yet clear whether staff cuts or moving jobs to cheaper locations will be considered, the source said.

"Something needs to be done but we are still working on how to get there," another second source said.

In January, Deutsche Boerse said derivatives trading volumes fell 18 percent and turnover on cash markets dropped 23 percent in 2012.

In 2012, turnover on derivatives markets at subsidiary Eurex Group fell to approximately 2.3 billion contracts, compared with 2.8 billion contracts in 2011.

The exchange operator said that there were 1.16 trillion euros ($1.54 trillion) of contracts on its cash markets in 2012, down from 1.51 trillion euros in the previous year.

In October, Deutsche Boerse was forced to abandon its 2012 revenue and profit targets because lower euro zone market turbulence hit trading volumes. (Reporting By Edward Taylor and Andreas Kroener; editing by Victoria Bryan)

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