Nasdaq Inc said on Tuesday it would wind down its struggling London-based interest rate derivatives exchange, NLX, as unrelated one-time costs pulled the transatlantic exchange operator to a fourth-quarter loss. Nasdaq started NLX in 2013 to take on Intercontinental Exchange Inc's ICE Futures Europe and Deutsche Boerse AG's Eurex in the interest rate futures market using copy-cat contracts. But NLX failed to gain traction and after investing 68 million pounds ($85.38 million) in the service, Nasdaq said it would shutter the trading platform on April 28.
Nasdaq also said it took a one-time non-cash charge of $578 million due to the write-down of the trade name eSpeed for its US Treasury trading business, which it bought for $750 million from BGC Partners Inc in 2013.
That expense was the main driver behind Nasdaq's net loss of $224 million, or $1.35 per share, in the quarter, which compares to net income of $148 million, or 88 cents per share, a year earlier. Other charges included $20 million in acquisition costs, and $12 million related to the retirement of former Chief Executive Officer Robert Greifeld.
The exchange operator combined its US and European fixed income units under the name Nasdaq Fixed Income. The changes were aimed at better aligning the Nasdaq's business segments, management, resources and clients, said new CEO Adena Friedman, who took the top job on Jan. 1.
"While this had an impact on our quarterly results, we feel it puts us in a stronger position to execute on the market opportunities in front of us," she said. Stripping out special items, Nasdaq earned 95 cents per diluted share, a penny better than analysts expected, according to Thomson Reuters I/B/E/S. Revenue at the New York-based company was up 12 percent to $599 million. Operating expenses rose to $386 million from $290 million a year earlier, mainly due to acquisition costs. Nasdaq completed four acquisitions in the first half of 2016, including its $1.1 billion purchase of options exchange operator International Securities Exchange (ISE) in June. The company also bought Canadian stock trading venue CXC and news distribution company Marketwired in February. It acquired business communications firm Boardvantage in May.
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