C Citigroup Inc

CBOE Holdings Inc. said increased transaction fees pushed first-quarter earnings and revenue higher, thanks to a shift in trading volume toward higher-margin contracts.

Results, however, fell short of expectations.

Chicago-based CBOE owns the Chicago Board Options Exchange, the world's largest options trading venue, and it exclusively lists widely traded products including options on the S&P 500. The exchange also owns the VIX, or Volatility Index, considered the stock market's "fear gauge" that correlates with market distress.

Like other exchange operators, the company generates most of its revenue from transaction fees. Though CBOE said trading volume was flat from a year earlier at 4.77 million contracts a day, transaction fees jumped 14% thanks to a favorable mix shift. Trading volume in higher-margin index options and futures contracts rose 28% in the quarter, lifting the average revenue per contract 19%.

Higher transaction fees offset declines in other areas of the business. Revenue from market data, a revenue source some competitors are trying to beef up, slipped 0.5% to $8.0 million, while access fees declined 3.2% to $13.2 million.

Chief Financial Officer Alan Dean highlighted CBOE's efforts to control costs. "We plan to continue to be disciplined in managing expenses while making prudent investments to strengthen and grow our business," he said. In the first quarter, the company's operating margin edged up to 49% from 48.7% in the year-ago period.

In all, CBOE reported a profit of $49.2 million, or 60 cents a share, up from $42.1 million, or 50 cents a share, a year earlier. Excluding certain one-time items, earnings per share were 61 cents.

Revenue climbed 14% to $162.3 million. Analysts expected 62 cents a share on $165.6 million in revenue.

Shares in the company, up 13% over the past year, were inactive during premarket trading.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

April 29, 2016 09:05 ET (13:05 GMT)

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