(Recasts to add details on earnings throughout)
By Guillermo Parra-Bernal and Aluísio Alves
SAO PAULO, Nov 13 (Reuters) - BM&FBovespa SA missed profit estimates in the third quarter, after the impact of a tax debt renegotiation offset robust equity and derivatives performance at Brazil's sole listed financial exchange.
São Paulo-based BM&FBovespa earned net income of 238.4 million reais ($92.1 million) last quarter, compared with the average estimate of 289 million reais in a Reuters poll of five analysts. Profit fell 4.6 percent and 15.3 percent on a quarterly and annual bases, respectively.
More working days and strong trading volumes during the quarter lifted revenue, helping offset climbing payroll costs that stoked expenses. BM&FBovespa booked 63.1 million reais in additional taxes to settle a dispute related to Bovespa Holding SA's 2007 initial public offering. BM&FBovespa was created from a merger between Bovespa and Bolsa de Mercadorias & Futuros SA the year after.
Under terms of the tax renegotiation, BM&FBovespa increased its income tax bill for the quarter by 45 million reais and booked 18.1 million reais in additional financial expenses.
Equities and derivatives volumes rose 18.8 percent and 18 percent, respectively, from the prior quarter, driving up net revenue to 546 million reais, BM&FBovespa said in a statement. Net revenue came in slightly higher than the poll's estimate of 541 million reais.
Demand for equity derivatives rose in the eve of the October presidential election, which coupled with a decline in trading activity by day traders and institutional investors fanned revenue at the Bovespa equity segment. Nonetheless, revenue per contract at the BM&F derivatives segment after a shift in the product mix towards lower-priced instruments such as options and some currency products.
Almost four years of weak economic expansion and rising government meddling in the economy have stifled investor confidence in Brazil, cutting equity market inflows and triggering price volatility. More hedging and concerns over the outcome of the election triggered a jump in market trading volumes.
Sales, general and administrative expenses rose 8.7 percent in the quarter, above the poll's 3.6 percent estimate after payroll expenses climbed. On a 12-month basis, SG&A expenses slipped 0.2 percent, in line with the company's guidance for the year.
Management plans to discuss third-quarter results at an event in São Paulo on Friday.
$1 = 2.5887 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Bernard Orr