Nov 7 (Reuters) - Cboe Global Markets Inc’s profit edged past analysts’ forecasts in the third quarter, as the largest U.S. options exchange earned higher fees from record trading levels and its purchase of European exchange operator Bats.
Cboe, like other exchange operators, has been diversifying its business through acquisitions, mainly as a hedge against swings in market volatility that often affect trading and clearing revenues.
Besides its $3.2 billion purchase last year of Bats Global, Europe’s biggest stock exchange, Cboe recently snapped up Silexx Financial Systems, a much smaller firm that provides data analytics and trade execution tools to customers across different asset classes.
Earlier this year, Cboe rival and NYSE owner ICE acquired two companies to boost its energy trading business, while Nasdaq Inc bought investment analytics provider eVestment for $705 million.
Cboe said on Tuesday its revenue, net of some costs, almost doubled to $269.7 million in the quarter ended Sept. 30, driven mainly by a bump in transaction fees thanks to Bats. But the result fell short of analysts’ average expectation of $270.3 million, according to Thomson Reuters I/B/E/S.
Results were also driven by "record quarterly average daily trading volume in VIX options and futures," Cboe Chief Executive Edward Tilly said. reut.rs/2hbH3ti
Cboe’s net income allocated to common stockholders rose 48 percent to $59.7 million or 53 cents per share. Excluding one-time items, Cboe earned 89 cents per share, topping analysts’ estimates by 1 cent.
Profit growth was limited by higher spending as total operating expenses more than doubled to $150.4 million, due to acquisition and compensation costs.
For 2017, Cboe expects adjusted operating costs of $413 million to $415 million, slightly lower from a prior forecast.
Separately, the company said its Chief Financial Officer Alan Dean would retire by year-end. Deputy CFO Brian Schell will replace Dean from Jan. 1. reut.rs/2hbVj5h (Reporting By Aparajita Saxena in Bengaluru; Editing by Sai Sachin Ravikumar)