average past the 5,000 mark, the securities industry enjoyed record revenue and earnings in the third quarter Pretax profits for all New York Stock Exchange member broker-dealers climbed to a record $2.43 billion for the quarter, while revenue rose to a record $25.7 billion, the Securities Industry Association reported. The pretax profits from the third quarter equaled those for the first two quarters combined. "The third quarter was without a doubt an excellent quarter," said Katrina Blecher, an analyst at Gruntal & Co. "Companies were running on all cylinders," with high mergers and acquisitions activity, higher volumes, and a full underwriting calendar, she said. Indeed, the average daily volume on the New York Stock Exchange in the third quarter was 341 million shares, 17% above 1994's full-year record daily volume. Nasdaq volume reached 443 million shares daily in the third quarter, 50% above 1994's full-year average. "Several positive trends in the fixed-income and equity markets combined to make this a stellar year for investors and issuers raising new capital," said Jeffrey M. Schaefer, chief economist at the securities association. Revenue from fixed-income markets is up because long-term interest rates for Treasuries have fallen about 20% from January, Mr. Schaefer said. "The success of issuers - and particularly investors - translated into a very strong year for the securities industry, which will raise more than $1 trillion in capital worldwide for the fourth consecutive year." Professionals executing many of these transactions benefited as commissions hit a quarterly high of $4.2 billion, up 6% from the second quarter and 33% from a year earlier. Revenue gains from securities trading reached a record $4.8 billion in the third quarter, up 18% from the previous quarter and 25% from a year earlier. Underwriting revenue reached $2.11 billion, up 9% from the second quarter and 72% from a year earlier. The underwriting volume for the quarter was second only to the record fourth quarter of 1993, when revenue reached $2.78 billion. Corporate underwriting volume through October is heading toward an annualized figure of $740 billion, about 30% below the 1993 peak. The only slower areas in the quarter were asset-backed bonds and initial public offerings. Asset-backed bonds were running at an annualized pace of $146 billion, less than one-third 1993's total. A flat yield curve slowed collateralized mortgage obligations. The repackaging of credit card receivables have constituted the bulk of this year's asset-backed transactions. Initial public offerings were down as well. The volume of closed-end fund deals, in particular, fell off considerably, with only two deals so far this year valued at $200 million. In 1993, these funds made up $16 billion of 1993's record IPO year. Industry expenses also rose, by 11% to $23.2 billion, compared with a 15% gain for revenue.
Save $400 off your subscription. Special offer ends April 30, 2017.
No credit card required. Complete access to articles, breaking news and industry data.
Have an account? Sign In