US trading technology vendor Nyfix is reporting widening losses for the second quarter after incurring increased restructuring costs and a $1.6 million contingency relating to a botch up in collecting Nyse linkage fees from clients.
The vendor has posted a second quarter net loss of $7.4 million, compared to $5.0 million for the year ago period. Group revenues increased 34% to $30.8 million, from $23.0 million for second quarter 2006.
Although Nyfix has been incurring restructuring costs during the first half of the year, a chunk of second quarter losses - $1.6 million - stemmed from a failure to pass Nyse linkage fees on to clients.
Nyfix says it began to incur "significant linkage fees" from the Nyse to route orders to other market centres with improved prices on 5 March, when Regulation NMS for exchanges went live in the US.
But due to "difficulties" in capturing trade information for Nyse outbound routed orders from 5 March through to 31 May, Nyfix was unable to notify clients of pass-through charges and so had to pick up the tab. The vendor says the "collectibility contingency" for pass-through Nyse linkage fees was resolved on a going forward basis from 1 June 2007.
Nyfix says it was also hit with "transitional rebuilding and remediation costs" of $1.7 million during the quarter, along with $1.4 million relating to an on-going SEC investigation into its financial reporting. The company says with the filing of its second quarter 2007 10-Q form, it is now current with its periodic filing requirements for the first time since August 2005.
The vendor also incurred pre-operating start-up costs of $0.6 million for its Euro Millennium ATS during the period. The off-exchange trading system for pan-European listed cash equities is expected to launch in early 2008.
In September 2006 the company got a $75 million cash infusion from private equity house Warburg Pincus and also appointed fintech veteran Howard Edelstein as its new chief executive officer. Earlier in the year the vendor sold its overseas business to French trading technology firm GL Trade in order to focus on its core businesses - FIX Order routing within the global equities markets and associated transaction offerings.