April 30, 2020 / 12:17 PM / a month ago

UPDATE 2-NYSE-owner ICE makes case for trading floor as profits rise

(Adds details from ICE conference call, CEO quote, NYSE study)

By John McCrank and Noor Zainab Hussain

April 30 (Reuters) - New York Stock Exchange-owner Intercontinental Exchange Inc on Thursday reported first-quarter profits that beat analysts' expectations, helped by a surge in trading volumes as investors reacted to developments in the coronavirus pandemic.

ICE, which runs futures and equities exchanges, as well as clearing houses and data services, reported its strongest quarter ever, with record revenues, despite "highly uncertain times," ICE Chief Executive Officer Jeffrey Sprecher said.

The company had a profit of $1.28 per share after stripping out one-time items like acquisition expenses. That topped analysts' average expectations by 4 cents, according to IBES data from Refinitiv.

The pandemic also led ICE to temporarily shutter the NYSE trading floor and move to fully electronic trading for the first time in the Big Board's 223-year history after traders and an ICE employee at 11 Wall Street tested positive for the novel coronavirus.

Market data since the March 23 NYSE floor closure highlight the value floor traders provide investors, Sprecher said on a call with analysts.

"Our data shows that market participants save millions of dollars a day when the floor is operating, thanks to tighter spreads and more efficient auction price discovery," he said.

The NYSE released a study that looked at trading statistics in U.S. corporate stocks with market caps above $500 million, between Feb. 20 and March 20, a period that included the fastest-ever 30% market drop. It compared that with how stocks traded after the March 23 floor closure until April 15, when the market clawed back a chunk of its losses in response to massive government stimulus programs.

The results showed that floor traders dampened volatility, with average bid-ask spreads on the NYSE widening out to 41.6 basis points after the floor closure from 29.1 basis points in the prior period, the study said.

It also showed that when traders were on the floor, there was substantially more actionable liquidity in the final half hour of trading, when about 20% of U.S. trading happens.

The NYSE will coordinate with local authorities and reopen the trading floor "once the time is right," Sprecher said.

The NYSE on Tuesday said it will open its NYSE Arca Options trading floor in San Francisco on May 4.

ICE's net income was $650 million, or $1.17 per share, in the quarter, up from $484 million, or 85 cents per share, a year earlier.

Total revenue was up 22.7% at $1.6 billion. (Reporting by John McCrank in New York and Noor Zainab Hussain in Bengaluru Editing by Supriya Kurane and Paul Simao)

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