TMX Group Inc. reported on Wednesday that second-quarter net income fell 5% to $46.9 million, from $49.2 million in the same quarter last year, thanks to higher expenses, lower investment income and lower revenue from cash markets equity trading.

For the three months ended June 30, the company earned revenue of $137.6 million, up 6% from $130.1 million in the second quarter of 2008. The increase was largely due to the consolidation of financial results from the Boston Options Exchange, which were not included in the results for the same quarter last year, as well as the inclusion of three months of revenue from the Montreal Exchange, compared to the inclusion of just two months of revenue during the second quarter of last year.

TMX Group said cash markets equity trading revenue from the TSX Venture Exchange dropped in the second quarter due to a 20% decrease in the volume of securities traded in Q2/09 over Q2/08. The lower revenue was also due to fee reductions that became effective in 2009.

Net income was also impacted by lower issuer services revenue, thanks to a reduction in sustaining listing fees, the company said.

These decreases were partially offset by higher revenue from energy trading, fixed income trading and market data.

Operating expenses in the second quarter jumped 24% to $67.6 million, up from $54.6 million in the second quarter of 2008. This was partially due to new technology initiatives, TMX Group said.

“Performance in the second quarter of 2009 was solid in a challenging business environment,” said Thomas Kloet, CEO of TMX Group. “We continued to execute on various strategic initiatives and took important steps to further expand our reach, strengthen our offering and extend our diversified portfolio.”

Kloet noted that the company took a 19.9% stake in London Stock Exchange’s derivatives business, EDX London, acquired NetThruPut’s crude oil trading operation and advanced MX’s integration into TMX Group.

“In the second half, we will leverage these investments, enhance our offering and further sharpen our focus on delivering business value to our customers,” Kloet said.

For the first half of the year, TMX Group reported net income of $89.8 million, up 10% from $82.0 million in the same period last year. Revenue in the first half increased 13% to $273.4 million, up from $242.4 million last year.

IE