Profit Down 48% at NYSE Brokerages

New data show just how large a bite the bear market has taken from Wall Street securities firms’ earnings.

The New York Stock Exchange said Thursday that member brokerages doing business with the public saw their combined profit fall to $1.8 billion in the second quarter, a 48% drop from $3.5 billion in the year-earlier period.

Revenue slid 16% to $51 billion.

NYSE specialist firms, which are charged with maintaining orderly markets at the world’s biggest stock exchange, suffered a 45% drop in second-quarter profit, to $108 million, the NYSE said. Specialists’ revenue declined 17% to $451 million.

The plunge in specialists’ earnings in part reflects the shift to decimal stock prices this year. That shift narrowed the spread between stocks’ “bid” and “asked” prices, hurting specialists and dealers while benefiting investors.

The NYSE’s chief rival, the Nasdaq Stock Market, earlier this week reported that its earnings sank 50% in the first half of this year, to $45.8 million from $91.6 million a year earlier. Revenue, however, was up 6% to $444 million.

Nasdaq, which has tentative plans to go public in 2002, reports results as if it already were a public company, though it is primarily owned by its member brokerages.

Nasdaq’s revenue is derived largely from fees it imposes on trades and from fees paid for new stock listings.

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Profit Bust

The bear market has slashed brokerage earnings from their peaks reached in late 1999 and early 2000, New York Stock Exchange data show.

After-tax profit of NYSE member brokerages each quarter, in billions

2001 QII: $1.8 billion

Source: New York Stock Exchange