Profit of NYSE parent ICE hit by mortgage headwinds, misses views

(Reuters) -New York Stock Exchange-owner Intercontinental Exchange Inc on Thursday reported a fourth-quarter profit slightly below Wall Street expectations, as rising interest rates weighed on the company’s mortgage software business, and its energy and financial futures volumes fell.

The NYSE had a systems glitch at the market open on Tuesday last week that sowed widespread confusion among traders, caused erroneous prices for 251 securities, and resulted in thousands of trades being nullified.

NYSE members have submitted compensation claims for losses, and the exchange could potentially face additional claims from regulators, ICE said in the legal and regulatory risks section of a regulatory filing related to its financial results.

ICE executives did not mention the NYSE glitch on a post-earnings call with analysts.

For the quarter ended Dec. 31, not including one-time costs such as merger and acquisition expenses, ICE reported net income of $1.25 per share, which was a penny off the consensus estimate of analysts, according to Refinitiv.

Aggressive interest rate hikes by the Federal Reserve in the quarter to tame high inflation sapped demand for ICE’s mortgage origination business, with its revenues down 28% from a year earlier to $249 million.

The rising rate environment, Russia’s war against Ukraine, strict COVID measures in China, and fears of a recession all added headwinds to global markets, with ICE’s financial and energy futures revenues slumping 12% and 17%, respectively, to $100 million and $278 million.

Revenue for ICE’s exchanges business dropped 3% to $982 million, while revenue for the company’s fixed income and data unit rose 12% to $537 million.

Overall revenues dipped 2% to $1.77 billion.

Rival Nasdaq Inc missed analysts’ estimates last week for its fourth-quarter profit, recording a significant hit to its indexing revenues as exchange-traded products, which heavily reference its indexes, declined sharply.

(Reporting by Anirban Chakroborti in Bengaluru and John McCrank in New York; Editing by Maju Samuel and Leslie Adler)