CBOE Profit Exceeds Estimates on Trading, Revenue Capture
CBOE Holdings Inc. (CBOE), the biggest U.S. options market by volume, reported second-quarter profit that beat analyst projections as trading volumes climbed.
Net income increased 20 percent to $45.5 million, or 52 cents a share, the Chicago-based company said today in a statement. Earnings excluding some items were 54 cents a share, exceeding the 51-cent average analyst estimate, according to data compiled by Bloomberg.
CBOE’s earnings growth slowed last year after volume fell for the first time in nine years and competition in the U.S. listed-options market increased to 11 exchanges. Options trading has averaged 17 million contracts daily in 2013, up about 7 percent from last year. Derivatives also helped boost second-quarter profit at New York-based NYSE Euronext, which owns two options exchanges.
The “results were driven by increased trading overall and our successful efforts to expand trading in our higher-margin proprietary products,” Edward Tilly, chief executive officer of CBOE, said in the statement. “Trading volume in VIX Index futures, which carry our highest fee per contract, reached a new quarterly record for the sixth consecutive quarter. We will remain focused on product development, extending our global customer reach and maintaining prudent fiscal management to deliver value to stockholders.”
The stock rose 4.2 percent to $52.95 at 8:22 a.m. in pre-market New York trading today. CBOE has gained 72 percent in 2013, the third-most among the 27 members of the Bloomberg World Exchanges Index.
CBOE’s earnings expanded 6 percent last year, down from 47 percent in 2011, after options volume slowed to a daily average of 15.9 million contracts from a ninth-consecutive record of 18.1 million in 2011, data from the Chicago-based Options Clearing Corp. show. The CBOE is the exclusive venue for options based on the CBOE Volatility Index (SPX), also known as the VIX, and the Standard & Poor’s 500 Index.
Operating revenue rose 14 percent to $150.8 million in the second quarter, driven by a 12 percent gain in transaction fees.
Revenue per contract increased to 33.4 cents from 31.4 cents in the second quarter of 2012, CBOE said. Total trading for the quarter rose to 317.4 million contracts, or 4.96 million contracts per day, from 302.7 million contracts, or 4.80 million contracts per day, a year earlier.
NYSE Euronext, the U.S. exchange operator being bought by IntercontinentalExchange Inc., said July 30 second-quarter earnings beat analysts’ estimates, as revenue from derivatives trading rose and costs fell. Nasdaq OMX Group Inc., owner of two options exchanges, reported on July 24 a decline in quarterly profit amid costs associated with acquisitions.
CME Group Inc., the world’s largest futures market, yesterday said second-quarter profit rose 27 percent to $311 million, or 93 cents a share compared with the year-earlier period as record foreign exchange and metals trading helped boost volume.
Deutsche Boerse AG, operator of the International Securities Exchange options market, the Eurex futures exchange and the Frankfurt bourse, reported second-quarter profit fell 8.2 percent dropped to 171 million euros ($227 million) as trading volumes declined.