CBOE Quarterly Earnings Beat Estimates on Increased Fees

CBOE Holdings Inc., the biggest U.S. options market by volume, reported fourth-quarter profit that beat analyst projections as revenue from transactions increased.

Net income increased 25 percent to $39.2 million, the Chicago-based company said today in a statement. Earnings excluding some items were 45 cents a share, exceeding the 42-cent average estimate of analysts surveyed by Bloomberg whose estimates ranged from 44 cents to 39 cents. The company also said it’s in settlement talks over a U.S. Securities and Exchange Commission investigation and has set aside $5 million to cover the resolution.

U.S. options trading slowed for the first time in a decade last year after a decline in stock-market volatility reduced investor demand for hedges. The number of contracts changing hands fell 12 percent to a daily average of 15.9 million in 2012, according to data from the Chicago-based Options Clearing Corp.

“It was a good fourth quarter, things look good and they managed expenses well,” Matthew Heinz, a St. Louis, Missouri-based analyst at Stifel Nicolaus & Co., said in a phone interview. “At the end of the day, it comes down to the overall performance of the options market, and from that standpoint they’re very well positioned.”

Total volume in futures on the CBOE’s Volatility Index, known as the VIX, rose 98 percent to a record 23.79 million in 2012, according to the CBOE Futures Exchange.

SEC Investigation

The exchange operator said a year ago that the SEC was investigating whether CBOE complied with its obligations as a self-regulatory organization. American exchanges are required to write rules for their markets, monitor trading and seek to ensure that they and their customers aren’t breaking securities laws.

The stock rose 0.5 percent to $34.46 yesterday in New York. The Bloomberg World Exchanges Index, which includes CBOE and 24 of its peers, has gained 11 percent this year.

NYSE Euronext, the U.S. exchange operator being bought by IntercontinentalExchange Inc., and Nasdaq OMX Group Inc. have reported fourth-quarter profit that topped analyst estimates amid cost cuts.

-- Editor: Lynn Thomasson