UPDATE 1-NYSE reports 44 pct profit rise on derivatives gain

Tue Apr 30, 2013 3:31am EDT

* Derivatives revenue rises 14 pct, led by Europe

* Cash trading revenue falls 6 pct

* Adjusted net income 57 cents/share vs 56 cent forecast

* Revenue $600 mln vs $605 mln forecast

NEW YORK/PARIS, April 30 (Reuters) - NYSE Euronext, which is being bought for $8.2 billion by IntercontinentalExchange Inc, reported a 44 percent rise in first-quarter profit on Tuesday, as European derivatives trading volumes increased and costs declined.

The Big Board parent said net income was $126 million, or 52 cents a diluted share, compared with $87 million, or 34 cents a share, a year earlier.

Stripping out one-time items such as costs related to the exchange operator's takeover by ICE and a $10 million pre-tax charge linked to a stock incentive plan, net income was 57 cents a share.

Analysts had been expecting 56 cents a share on average, according to Thomson Reuters I/B/E/S.

NYSE's net revenue for the quarter fell 0.2 percent to $600 million as a 14 percent gain in derivatives was offset by a 6 percent drop in cash trading and listings, and higher liquidity payments. Analysts had on average been expecting $605 million.

With trading volumes falling for three straight years and nearly two-thirds of NYSE's total revenue linked to transaction and clearings fees, NYSE last year turned its attention to cost reductions, aiming to eliminate $250 million from expenses by 2014. It cut $115 million in 2012.

Costs fell in the first quarter too, although the biggest decline was in merger expenses and exit costs, which totaled $8 million, down from $31 million in the year-ago quarter.

NYSE said it was on track to surpass its full-year 2013 "cost-guidance target of $1.52 billion". Operating expenses totaled $1.72 billion in 2012.

NYSE announced in December that it was being bought by Atlanta-based derivatives market and clearing house operator ICE. The deal, expected to close in the second half, gives ICE control of Liffe, Europe's second-largest derivatives market.

Derivatives trading remains highly profitable for the exchanges, and new regulations have dramatically expanded the demand for clearing over-the-counter contracts.

ICE is due to report its results on Wednesday.

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