TMX Group Inc. (TSX:X) says its profits dropped 21% in the fourth quarter as the operator of Canada’s largest stock exchange booked lower revenue from issuer services and cash markets trading.

The firm said its net income fell to $52.7 million, or 70 cents per common share, during the fourth quarter of 2011, a decrease from $67 million, or 90 cents per share in the same quarter a year earlier.

Revenue dropped seven per cent to $161.7 million from $174.1 million.

Analysts on average, had been expecting earnings of 84 cents per share on $164 million in revenue, according to Thomson Analytics.

TMX Group chief financial officer Michael Ptasznik said the results reflect “the slowdown in listing and equity trading markets during the fourth quarter.”

“Our costs were higher in the fourth quarter compared with the fourth quarter of last year as we continue to deploy new technologies and add resources to generate growth,” he added.

TMX Group’s higher expenses included $5.7 million in pre-tax costs related to the proposed Maple Group acquisition.

Trading volumes and values fell sharply in recent months, reducing revenues, as volatility and economic uncertainty pushed some investors out of equity markets.

Maple Group, a consortium of 13 financial institutions looking to take control of the owner of the Toronto Stock Exchange, said last week it was extending its takeover offer by about a month to Feb. 29.

The group says it will continue to extend the deadline until it receives a verdict from provincial and federal regulators, which are reviewing how the deal to amalgamate trading and clearing platforms would affect Canada’s capital markets.

TMX Group’s board now supports a $3.8-billion takeover offer from Maple Group, a 13-member consortium comprised of several Canadian banks, pension funds, investment firms and a life insurance company.

The TMX board had originally supported a merger proposal with the London Stock Exchange Group and dismissed the Maple Group offer over a number of debt, competition and regulatory concerns.

But after the LSE deal failed to gain enough shareholder support in the face of the richer Maple bid this summer, the board turned its attention to the Maple offer.

Maple needs regulatory approvals to merge the owner of the Toronto Stock Exchange with the alternative Alpha Trading System, and clearing and depository firm CDS Inc.

Alpha and CDS are owned by the major players in the Canadian securities industry, several of which are part of the consortium.