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Deutsche Boerse Third-Quarter Earnings Fall on Low Volatility

Oct. 29 (Bloomberg) -- Deutsche Boerse AG, operator of the Eurex derivatives market and the Frankfurt stock exchange, said third-quarter profit fell 61 percent as volatility and interest rates remained low.

Net income for the quarter dropped to 62 million euros ($85 million) from 160 million euros a year earlier, according to a statement today from the Frankfurt-based exchange. Earnings before interest and taxes dropped to 101 million euros from 245 million euros. Both figures were reduced by 114.8 million euros because of a U.S. government investigation of Deutsche Boerse’s Clearstream unit.

Deutsche Boerse and rivals including NYSE Euronext and London Stock Exchange Group Plc have seen trading volumes drop following the global financial crisis of 2008. Traditional exchanges have also lost market share to new venues such as Bats Global Markets Inc.

The German exchange owner said yesterday that the fine its Clearstream unit faces from U.S. government allegations that it violated sanctions against Iran may be half the previously disclosed amount. The penalty totals $169 million, or only $152 million if the company settles with the U.S. Treasury Department’s Office of Foreign Assets Control, Deutsche Boerse said in a statement yesterday. In January, it estimated the potential fine at $340 million.

Third-quarter net revenue fell 2.8 percent to 458 million euros at Deutsche Boerse, while operating costs rose 58 percent to 359 million euros.

Deutsche Boerse was blocked last year by the European Commission from buying New York-based NYSE Euronext. IntercontinentalExchange Inc. of Atlanta later agreed to purchase NYSE Euronext in a deal it says should close by Nov. 4. Chicago-based CME Group Inc. has approached Deutsche Boerse to consider starting merger talks, four people familiar with the situation said in February.

Shares of Deutsche Boerse fell 1.9 percent to 56.31 euros today, trimming their 2013 gain to 22 percent.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Sam Mamudi in New York at smamudi@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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