Question-and-Answer Session
Operator
Thank you. (Operator Instructions). Your first question is from the line of Rich Repetto with Sandler O'Neill.
Richard Repetto - Sandler O'Neill
Yes, good morning, Michael.
Michael LaBranche
Hi Rich.
Richard Repetto - Sandler O'Neill
Great quarter. The $49 million, you just said, is that a margin off of the principle the trading -- what do you call it your net trading revenue?
Michael LaBranche
No. Well that is market making segments profit, pre-tax profit. So, that’s after all expenses after all compensation. And then, in addition to that our other operating segment is our institutional brokerage segment, that broke even in the past quarter. And so, if you take the $49 million less administrative cost, which is basically a servicing the bonded debt of $200 million approximately and other costs of our holding company, our pre-tax profits for the quarter of $40 million on an operating basis.
Richard Repetto - Sandler O'Neill
Okay. The question everybody’s going to ask you is, out of that $49 million you are trying to break out sort of the ETF sort of profitability versus --
Michael LaBranche
Okay. Let me try to answer that question, I think, if I don’t answer, just come back and ask me again. But that $49 million encompasses all of our market making segments. So, that includes our traditional cash, equities business, which used to be known as a specialist business, it includes our ETF business, and includes our London trading operation and includes our Hong Kong trading operation, it includes option trading. So, it’s all of our businesses together.
Now, with regards to our traditional cash, equities business, that particular business had the second best quarter since the introduction of a hybrid in the beginning of 2007. So, in the eight quarters since the hybrid was put in place, that’s the second best quarter, there are changes going on in that business. It still remains a small portion relative of our overall business today going forward.
There is some speculation that the changes will be beneficial to us. That business is still in transition. We are adapting to the new trading market model and as much as I think, this management has done a very good job in keeping this business growing and keeping it profitable with some of the changes that have taken place. It’s still, it’s going to be a small relatively piece of our business going forward in our estimation.
- To read the full transcript on Seeking Alpha, click here »
