While the competition for commodity trading market share continues to rage on between the New York Mercantile Exchange (Nymex) and Atlanta-based IntercontinentalExchange (ICE), the rivals are also neck and neck in earnings as both companies reported record 1Q2007 results last week.

Electronic energy marketplace and soft commodity exchange ICE said Wednesday it posted record quarterly consolidated net income for 1Q2007 due to strong volume at ICE Futures, the company’s UK futures business segment; at the Board of Trade of the City of New York Inc. (NYBOT), ICE’s U.S. futures business segment; in ICE’s global over-the-counter (OTC) business segment; and in the company’s market data business segment, which now includes the NYBOT market data business. The company nearly tripled its net income to $55.6 million for 1Q2007, an increase in quarterly earnings of 183% compared to $19.7 million in net income recorded for 1Q2006.

Consolidated revenues in the quarter increased 152% to a record $126.6 million, up from $50.3 million in the first quarter of 2006. Diluted earnings per share in the first quarter of 2007 were $0.80, a 142% increase compared to $0.33 in the same period in 2006.

“This marks our fifth consecutive record quarter, and these results were achieved amid continued rapid expansion of our markets while we executed on many key initiatives in our core commodities business,” said ICE CEO Jeffrey C. Sprecher. “In a highly competitive environment, ICE continues to demonstrate its ability to innovate and to serve customers around the globe, while maintaining its lead in the electronic energy markets and successfully adding new products, customers and markets.”

In New York, Nymex posted record net income for the first quarter of $56.2 million, an increase of 67% over the $33.6 million that the company posted during 1Q2006. For the quarter, Nymex recorded diluted earnings per share of $0.59, based on 94.8 million shares outstanding, compared to $0.44, based on 75.1 million shares outstanding, for the first quarter of 2006. Total operating revenues for the first quarter rose 47% to $164.2 million compared to $111.7 million for the first quarter of 2006. The exchange also announced that the board of directors approved a quarterly dividend of 10 cents per share on the company’s common stock to shareholders of record as of the close of business on June 1, and payable on June 29.

Nymex also reported that a recent trend is continuing. The quarter revealed that electronic trading continues to gain volume while floor trading gets sparser, leading to industry speculation that the floor’s days are numbered.

“We continue to execute on the aggressive goals we have set since our public offering,” said Richard Schaeffer, Nymex chairman. “During the first quarter, we set volume, revenue, net income and profitability records, resulting in tremendous quarterly performance. Our electronic volumes on the industry-leading CME Globex electronic trading platform hit all-time highs, and we have taken back market share in our energy and metals products.”

Both ICE and Nymex have been ravenous on the acquisition front as they each attempt to strengthen their positions within various markets.

After completing its acquisition of NYBOT in January (see NGI, Jan. 15), ICE went on to complete a multi-tiered alliance with NGX and a purchase of Intelligence Press Inc.’s (IPI) NGI indexes with a perpetual leaseback agreement that will allow IPI to continue to determine and publish the NGI indexes (see NGI, April 2; April 16). ICE is also competing against the Chicago Mercantile Exchange for wooing rights of CBOT (see NGI, March 26).

“During the quarter, we completed our acquisition of NYBOT, successfully launched electronic trading in NYBOT’s soft commodity contracts and integrated the NYBOT operations smoothly and ahead of schedule. At the same time, we extended our reach into the energy markets, including our technology and settlement alliance with NGX to expand even further into Canadian markets, our purchase of the NGI indexes, and our continued work on new products including the ICE Middle East Sour Crude futures contract,” said Sprecher. “In addition, we were granted 60/40 tax treatment for qualified U.S.-based ICE Futures customers, began developing a world-class clearing solution, and introduced our new matching engine in our key OTC markets. Finally, we offered what we believe is a superior proposal to merge with the Chicago Board of Trade, with a 13.4%, or $1.1 billion, premium for CBOT shareholders.”

ICE’s total average daily volume (ADV) for its electronically traded energy contracts in ICE’s global futures and OTC markets exceeded the one million contract mark for the first time, with ADV of 1.2 million contracts in the first quarter of 2007, representing a 96% increase compared to ADV of 603,000 contracts in the prior year’s first quarter.

In addition to earnings, ICE also announced Wednesday that it has appointed Scott A. Hill as senior vice president and CFO effective May 14. Richard V. Spencer, ICE senior vice president and CFO since December 2001, was recently appointed vice chairman of NYBOT, and has been named to the newly created post of vice chairman of ICE.

Much like its chef rival, Nymex, which had a very successful initial public offering in November 2006, has also been busy on the acquisition front. Following the IPO (see NGI, Nov. 20, 2006), where stock prices more than doubled on their first day of trading on the New York Stock Exchange, Nymex acquired investment positions in two companies (see NGI, Feb. 19; April 16).

“Since January, we have announced and completed important transactions, including a 19% investment in Optionable Inc. to enhance our options offering; and a 10% investment in Montreal Exchange Inc., with which we are jointly creating the Canadian Resources Exchange (CAREX) to serve the vast Canadian energy marketplace,” said Schaeffer. “We also announced an increase in Nymex member transaction fees, which will improve our profitability while maintaining our status as the most aggressively priced market in our industry. We will continue to look at additional acquisitions and strategic investments. Our focus remains on diversification and on expanding the Nymex brand globally into untapped and underserved markets.”

Nymex clearing and transaction fees rose 50% for the first quarter 2007 to $138.2 million compared to $92.4 million for the year-ago period. Market data fees were $23.1 million for the first quarter of 2007, versus $15.4 million for the first quarter of 2006, an increase of 50%.

Average daily volume for Nymex was 1.513 million contracts during the first quarter of 2007, a 40% increase over the first quarter of 2006. Nymex electronic volume on CME Globex was an average of 597,000 contracts per day and represented a 485% increase over first quarter 2006 electronic volume. With the surge in electronic trading, Nymex floor-traded energy futures and options averaged 330,000 contracts a day, a decrease of 39% from the first quarter of 2006.

“Nymex continues to be the global leader and innovator in the energy and metals markets,” said Nymex CEO James E. Newsome. “In the first quarter, we introduced a number of significant new products in response to demand by our customer base, such as uranium, catastrophe risk and alternative energy futures. We are pleased by the progress we have made in improving our profitability and in increasing electronic volume on CME Globex and our Nymex ClearPort trading and clearing platforms.”

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