NYSE Euronext to cut more costs ahead of $8.2bn sale

NYSE Euronext, the transatlantic exchanges operator, said on Tuesday it would cut more costs ahead of its planned $8.2bn sale to US rival Intercontinental Exchange, slated for later this year.

In common with other exchanges the bourse reported a slowdown in earnings in the fourth quarter amid dwindling appetite for trading from investors. However, it said an extensive cost reduction programme was far ahead of targets, with $115m last year compared with a forecast of $63m.

The results come as the exchange prepares to take a planned deal with US rival ICE, predominantly a commodity and derivatives exchange, before antitrust authorities in the US and Europe.

The cash-and-shares deal, in which the 12-year-old ICE will purchase the 220-year-old owner of the New York Stock Exchange, will create a rival to CME Group and Deutsche B�rse as one of the world's largest derivatives exchanges by contracts traded.

More News From Financial Times
ICE agrees NYSE Euronext takeover
Quick View: Battleground Europe for bourses
NYSE deal drew interest from Buffett
NYSE / ICE - if they can make it there
ICE sets $750m break fee on NYSE deal

NYSE said revenues for the three months to December 2012 fell 11 per cent to $562m while net income for the period fell from $110m to $28m year-on-year as it took charges for writing off investments in its European clearing house, unwinding its stake in BlueNext, the carbon-trading exchange, and other merger expenses.

"Our fourth-quarter results reflect both the beneficial actions we took to refinance our debt and rationalise our clearing plans for Liffe in connection with the announced move to ICE Clear," said Duncan Niederauer, chief executive of NYSE Euronext.

Alongside the ICE deal in December, NYSE agreed to move clearing of contracts traded on its Liffe derivatives exchange to ICE's London-based clearing house, rather than build its own operations.

The move will allow NYSE to compete for business as new rules around derivatives markets come into force over the next 18 months. Bourses are looking to exploit a push by global regulators to move more of the vast over-the-counter (OTC) derivatives market on to exchanges and through clearing houses.

Exchanges will be able to earn profits from managing the risk on open-ended derivatives contracts. NYSE was planning to spend $20m on its European clearing operations last year.

For the full-year, NYSE Euronext revenue fell 13 per cent to $2.6bn while operating income fell 26 per cent to $743m.

Turnover in its information and technology services business fell 6 per cent year-on-year in the fourth quarter, to $120m as customers delayed spending on technology and connectivity to markets.