UPDATE 4-NYSE Euronext bets on cuts to offset trading slump
* Costs fall $82 mln year-to-date
* Q3 net revenue down 21 pct to $559 mln
* Net income down 42 pct to $108 mln
LONDON, Nov 6 (Reuters) - NYSE Euronext , the world's largest stock exchange, is cutting costs in response to a trading slump that is hurting the world's top exchanges and brokers.
NYSE said on Tuesday it was ahead of schedule in a $250 million cost-cutting plan launched earlier this year, although savings had yet to show through on the bottom line as revenue fell faster than costs. Third-quarter net income dropped 42 percent.
The exchange's results reflected weaker trading in its main equities and futures markets in New York, London and Paris because of investors' concerns about the global economy.
Stock markets and the brokers who trade on them for their investment bank and asset management clients rely on high trading activity to support revenue because they charge commission on the value of individual transactions.
Many analysts expect NYSE rival the London Stock Exchange and interdealer broker ICAP to report lower profit next week after slow trading for most of the third quarter.
NYSE chief executive Duncan Niederauer said on Tuesday that his cost-cut plan, dubbed Project 14, was a longer-term strategy to boost profit. The company hopes revenue will stabilise over time while it continues to cut jobs and make savings on technology.
``Project 14 ... will drive a step-up in the underlying earnings power of the company in the coming years, even if trading volumes remain lackluster,'' Niederauer said.
NYSE said the average daily value of European shares traded was down 31 percent in the third quarter compared with last year, while equity trading activity in the United States was down 39 percent.
The company cut $82 million of costs - a third of the 2014 goal - beating its target for this year of $63 million.
``Project 14 seems to be moving ahead of schedule which is encouraging given the weak trading levels seen this year,'' Berenberg Bank analyst Richard Perrott said.
NYSE Euronext shares in Paris were trading down 3.9 percent to 18.93 euros at 1553 GMT.
Deutsche Boerse, the exchange with which NYSE tried and failed to merge earlier this year, was last week forced to cut its 2012 revenue target as lower market volatility caused a dip in third-quarter trading.
LOW TRADING LEVELS
Analysts expect the LSE to post a 7 percent drop in first-half net income to 120 million pounds ($192 million) on Nov. 16, according to Thomson Reuters Starmine data.
ICAP is expected to report first-half net income down 8 percent to 117.5 pounds on Nov. 14.
``Low overall trading levels are a challenge for the LSE and ICAP, though at least in this period the LSE should be cushioned thanks to earnings from non-volume related businesses like information subscriptions and treasury income from its clearing house,'' said Perrott.
Some of the world's top investment banks have also reported lower third-quarter equity revenues, including UBS and JP Morgan.