Montreal Exchange Inc. today announced lower profit for the fourth quarter ended Dec. 31, 2007.

Net earnings amounted to $6.3 million, a 16% decrease compared to $7.5 million in the fourth quarter 2006.

“The liquidity problem in the short-term money and credit markets in Canada continue to adversely affect trading and money market instruments such as commercial paper and also other related derivatives,” said MX president and CEO Luc Bertrand, during a conference call Monday afternoon.

Adjusted net earnings, which exclude other items, adjustments to income tax expenses and unrealized gains on foreign exchange, amounted to $7 million, or 23¢ per diluted share, in the fourth quarter 2007, compared with $6.5 million, or 23¢ per diluted share for the same period 2006.

The increase in adjusted net earnings was due to significantly higher investment income and improved equity contribution from the Boston Options Exchange (BOX), partly offset by higher operating costs and increased tax expense.

“We continue to be bullish on the North American options market, reinforcing our decision to increase our ownership position in BOX to 53.2%.” said Bertrand.

Revenues for the fourth quarter 2007 were $19.6 million compared to $19.5 million for the same period of 2006.

The slight increase reflects an increase in revenue from information system services, which was largely offset by a decline in transaction and clearing revenues.

Net earnings for the full-year 2007 increased 4% to $25.7 million.

Adjusted net earnings were $29.5 million, or 98¢ per diluted share, for 2007, up $4.7 million, or 7¢ per diluted share, compared to 2006.

Revenues for the full-year 2007 increased to $83 million, up 5% from 2006, reflecting overall growth in trading volumes.

“Fourth quarter and full-year financial results for 2007 were influenced by the difficult liquidity conditions that prevailed in the Canadian short-term interest rate market during the second half of 2007,” said Bertrand, in a release.

“While adverse market conditions had an impact on trading in our short-term interest product, we saw strong annual volume growth in longer term interest rates products, index and equity derivatives. In the US options business, the Boston Options Exchange registered an exceptional increase in trading activity during the fourth quarter and strong growth through the year. We continue to be enthusiastic about the growth potential of the derivatives markets and the future of MX as part of the new TMX Group,” stated Bertrand.

Trading activity in index derivatives and equity options accounted for most of the growth in volume for 2007, at 25% and 9% respectively. However, overall trading activity in interest rate derivates increased by only 1% with a 21% increase in the 10-year government of Canada bond futures contract, the CGB, being largely offset by a 9% decrease in BAX trading volumes.

Investment income increased to $6.3 million in 2007, compared to $2.6 million the previous year. This was attributable to increased cash and cash equivalents and temporary investments held throughout the year and a $1.6 million unrealized foreign exchange gain on short-term investments.

MX agreed in December to merge with TSX Group. MX shareholders will vote Wednesday on the deal. “I firmly believe that creating TMX Group is the right move in this period of global exchange consolidation,” added Bertrand, this afternoon.

After the shareholder vote, regulatory approval is required to complete the transaction. The deal is expected to close before the end of the second quarter.