The U.S. securities industry enjoyed record profits in 2006, according to the Securities Industry and Financial Markets Association.

SIFMA reported that full-year profits reached US$33.1 billion, up 88.2% from the US$17.6 billion earned in 2005, and 4.7% above the previous record of US$31.6 billion in 2000.

Fourth quarter pre-tax profits of US$10.8 billion were 54.9% above the preceding quarter and 156.8% above results in the same year-earlier period. The increase in profits in the quarter occurred while both quarterly gross revenues and expenses hit record high levels.

The securities industry’s performance in 2006 was led by exceptionally strong trading gains and record underwriting revenue, SIFMA said. Trading gains rose to US$12.1 billion in Q4, a 10.3% increase from US$11.0 billion in the prior quarter, and 106.4% from US$5.9 billion in the fourth quarter of 2005. For the year as a whole, securities firms reaped US$43.0 billion in trading gains, 84.7% above 2005’s level of US$23.3 billion.

Gains from investment accounts also had a strong quarter, recording gains of US$1.9 billion, up 56.4% and 166.1% over US$1.2 billion the previous quarter and US$0.7 billion in the same year-earlier period, respectively. Gains reached US$5.5 billion for the year as a whole, up 93.9% over US$2.9 billion in 2005.

Underwriting revenue of US$7.4 billion in the fourth quarter was the highest quarterly total in 2006 for that revenue line, 55.2% higher than US$4.8 billion in the immediately preceding quarter and 33.5% above US$5.5 billion in the same year-earlier period. For 2006 as a whole, underwriting revenue reached a record US$23.6 billion, an increase of 18.2% over the prior year’s US$20.0 billion.