NYSE Revises Report on Member Firms’ Profitability
The New York Stock Exchange on Thursday revised a report released the day before on its 240 member firms’ profitability in the fourth quarter of 2002, saying the broker-dealers in aggregate had a $695-million profit, instead of a $218-million loss.
The NYSE said the firms’ after-tax profits declined 62% and revenue fell 16% from the same quarter a year earlier. The exchange said the restatements came as a result of amendments in the unaudited financial results reported by several member firms. It would not name the firms or say how many were involved.
The exchange also revised earnings of its 10 specialist firms that match buyers and sellers of securities on the NYSE floor and don’t deal directly with the public. They had after-tax profits of $106 million -- a 1.9% decline from a year earlier, as opposed to the small increase the NYSE reported Wednesday.
“We have been doing this at least for 20 years and this is the first time we can recall this happening,” NYSE spokesman Christiann Brakman said.
The revised numbers still chronicle a difficult time for brokers. Of the 240 firms, 103 had pretax losses totaling $2.03 billion in the quarter compared with a loss of $1.82 billion for 108 firms in the year-earlier quarter.
The 137 profitable firms last quarter saw pretax earnings fall 33% to $3.1 billion from $4.6 billion for 153 profitable ones in the year-earlier period.
The NYSE composite index, which includes all the common stocks listed on the exchange, dropped 20% in 2002.
The average dollar value of daily trades on the NYSE this year has fallen 20% from the average for all of 2000. The drop, combined with slumping demand for underwriting and other services, led to the first back-to-back annual profit decline for the securities industry in at least 12 years, according to the Securities Industry Assn.
Declining profits among Wall Street securities firms, which are responsible for about a third of New York City’s tax revenue, have contributed to a $3.4-billion municipal budget gap, forcing city officials to propose tax increases and seek concessions from unions.