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Whether low volatility in the OTC FX market is caused by external economic factors, the evolving requirement of the FX trader or a drive toward exchange traded derivatives is not so easy to quantify as retail and institutional FX firms around the world came to the end of the first quarter of the year with record lows.
Today, IntercontinentalExchange (ICE) has released its first quarter operating metrics, amounting to record statistics which absolutely run counter to the stagnant trading activity experienced within many other firms. It is possible that this could be used as some measure by which to gauge the direction in which electronic trading of derivatives is taking in terms of heading onto exchanges, especially as many firms such as NASDAQ OMX and CME Europe have recently explored this avenue, with CME actually setting up a derivatives exchange in London.
For the quarter ended March 31, 2014, consolidated net income attributable to ICE was $262 million on consolidated revenues less transaction-based expenses of $932 million. On a GAAP basis, diluted earnings per share (EPS) in the first quarter were $2.27.
Certain items were included in ICE’s operating results that were not indicative of the company’s core business performance for the first quarter of 2014. Excluding these items, net of tax, first quarter 2014 adjusted net income attributable to ICE was $301 million and adjusted diluted EPS were $2.60. Adjusted figures exclude acquisition-related transaction and integration costs of $60 million and the related tax impact, primarily due to the NYSE Euronext integration. Please refer to the reconciliation of non-GAAP financial measures included in this press release for more information on adjusted net income attributable to ICE and adjusted diluted EPS.
ICE Chairman and CEO Jeffrey C. Sprecher made a corporate statement on the results today “These strong results reflect our focus on delivering value for our customers and shareholders. The integration of our businesses is progressing well and the combined team is working to execute on operational and strategic objectives. While the economic environment and volatility remain muted, we are delivering new products and risk management services, as well as extending our footprint in Asia. We believe our strategic roadmap will enable us to continue to grow and establish new ways to serve our customers in 2014 and for years to come.”
Scott Hill, ICE CFO said: “ICE’s strong first quarter results were driven by the addition of new businesses, solid growth in our global agriculture complex and a record quarter for CDS clearing. We achieved record revenues and have taken actions that have already allowed us to realize over 40% of our expense synergy target relating to the NYSE Euronext acquisition, increasing the efficiency of our operations globally. We are on track to deliver on our total expense synergies, pay down debt to reach our targeted levels, divest non-strategic businesses and deliver solid returns to our shareholders.”
First quarter 2014 consolidated revenues net of transaction-based expenses were $932 million. Included in this amount are net transaction and clearing revenues, less transaction-based expenses of $574 million.
Consolidated market data revenues for the first quarter of 2014 were $133 million and listings revenues were $91 million. During the first quarter of 2014, NYSE Group led globally in capital raising with $8.7 billion in total proceeds on 30 initial public offerings (IPOs). NYSE Group also led in technology IPOs with 10 IPO’s and $1.7 billion in proceeds. Consolidated other revenues were $134 million, which includes technology services, trading license fees, regulatory and listed company service fees, among others.
Consolidated operating expenses were $523 million for the first quarter of 2014, including $60 million in acquisition-related transaction and integration costs associated primarily with the NYSE Euronext integration. Consolidated operating income for the quarter was $409 million and operating margin was 44%. The effective tax rate for the first quarter was 28%.
Consolidated cash flow from operations was $519 million for the first quarter of 2014. Capital expenditures were $31 million and capitalized software development costs totaled $20 million in the quarter.
Unrestricted cash and short-term investments was $1.0 billion as of March 31, 2014 and the company had $4.9 billion in outstanding debt.
For the official statistics from ICE, click here