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Jared Dillian
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Was it Worth It?

In this piece from 10th Man, author Jared Dillian discusses how the ETF revolution is less about ETFs and more about indexing; about how people have come to view stocks less as stocks and more as blobs of stocks.

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April 21, 2005

More Volume Gives Lift To all Nasdaq Markets

By Peter Chapman

Last year was a better one for the Nasdaq market centers. The three major trading centers - Nasdaq, the Archipelago Exchange and the INET division of Instinet-all made more money in 2004 than they did in 2003.

The companies credited their improved nets to higher trading volumes and cost cutting. Last year was "an outstanding year for Archipelago," commented Jerry Putnam, Arca's chairman and CEO.

Collectively, the trio made $114 million in net income, up from an aggregate loss of $90 million the previous year. The increase in net income matched a collective jump in revenues. The group grossed $1.54 billion last year, up from $1.46 billion in 2003. All three companies reported higher net incomes. Only Nasdaq saw its revenues shrink. Nasdaq's bottom line improvement - a profit of $11 million versus a loss of $105 million-was the result of significant cost cuts in technology, personnel, real estate and the elimination of non-core businesses.

Based on trading and market data fees, Nasdaq is now the smallest of the three competitors. A loss of market share left Nasdaq with only $324 million in trading-derived revenues last year versus $375 million the year before.