EARNINGS PREVIEW: US Exchanges Face Regulatory Changes
July 16 2009 - 3:19PM
Dow Jones News
TAKING THE PULSE: Exchanges could be hurt by a plan proposed by
U.S. commodities regulators that would impose sweeping trading
limits on energy, and possibly other, commodities in an effort to
crack down on speculation. If the regulators decide to set such
limits, it would be a major change from the current policy, which
passes much of that authority to exchanges.
Meanwhile, the Securities and Exchange Commission is expected to
tighten U.S. stock-market listing rules starting next month after
relaxing the requirements in the wake of the global financial
crisis. Exchanges could feel revenue pressure if companies can't
meet the increased standards.
The major exchanges have been facing pressure from smaller,
alternative trading venues, such as BATS Exchange and Direct Edge,
which have been taking market share amid their quick execution
times. BATS also will launch a U.S. options exchange in direct
competition to markets run by NYSE Euronext (NYX) and Nasdaq OMX
Group Inc. (NDAQ) by early next year, it said this month.
COMPANIES TO WATCH:
CME Group Inc. (CME) - reports July 23
Wall Street Expectations: Analysts surveyed by Thomson Reuters
expect earnings of $3.24 a share on revenue of $652 million,
compared with year-earlier earnings of $3.67 a share and revenue of
$563.2 million.
Key Issues: The company is looking for ways to stop an
eight-month slide in average daily trading volume, recently
launching four new futures and options contracts designed to reduce
the global output of greenhouse gases. Officials have pointed to
customers' shifting product focus as the reason for the volume
declines.
NYSE Euronext (NYX) - reports July 30
Wall Street Expectations: Analysts forecast earnings of 45 cents
a share and revenue of $1.15 billion. A year earlier, the company
posted earnings of 73 cents a share and revenue of $1.11 billion,
excluding so-called Section 31 fees.
Key Issues: The company has slashed order-execution times
twenty-fold at the New York Stock Exchange as part of an effort to
catch up to competitors that have taken market share. NYSE Euronext
reported a rise in U.S. and European derivatives trading in June,
though its share of U.S. stock trading continued to erode from a
year earlier.
IntercontinentalExchange Inc. (ICE) - reports Aug. 4
Wall Street Expectations: The company is projected to earn $1.13
a share on revenue of $242 million, compared with $1.19 a share and
$197.2 million, respectively, a year earlier.
Key Issues: The exchange said June average daily volume rose
14%, reaching a new high, as the futures-exchange operator
continues to pick up market share amid slowing trading at larger
rival CME. The firm is mostly energy-focused, but is attempting to
attract business to its clearinghouse for over-the-counter credit
derivatives.
Nasdaq OMX Group Inc. (NDAQ) - reports Aug. 6
Wall Street Expectations: Analysts see earnings of 48 cents a
share and revenue of $373 million, compared with 48 cents a share
and $380.2 million a year earlier.
Key Issues: The company has still been losing share of
matched-trading volume as alternative trading venues build their
presences. Nasdaq OMX also has been pitching its line of client
services to private companies to court potential IPO candidates,
offering tools that were previously available only to its listed
clients.
(The Thomson Reuters estimates and year-earlier results may not
be comparable due to one-time items and other adjustments.)
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com