The 207-year-old exchange, which plans to become a public company and sellshares to investors next year, earned a $17.6 million profit in the thirdquarter compared with $30 million in the year-ago period.

The reason for the dip was a spike in expenditures, which rose to $147.9million in the quarter, up $11.5 million, or 8 per cent, from $136.4 milliona year-ago. Also, the exchange's revenues fell to $180.3 million in thequarter, down 5 percent from $189.3 million in the year-ago quarter.

The exchange derives its revenues from fees from the 3,000-plus companiesthat list their stocks on the NYSE, share transaction charges, and fromselling stock price quotes.

NYSE spokesmen declined to comment on the rise in expenses, but a personclose to the exchange attributed it to increased technology spending.The financial services industry has spent billions of dollars to overcomethe so-called millennium bug, a programming problem that could paralysecomputers worldwide when the clock turns to January 1, 2000. More technologyspending is expected to accommodate a planned change to quote US stockprices in decimals instead of fractions next year.

The NYSE alone over the past decade has spent $2 billion on varioustechnology initiatives, chairman Richard Grasso recently told members ofCongress. Grasso earlier this year announced plans to take the exchangepublic and extend trading hours beyond the current close at 1600 EDT (2000GMT). The initiatives come at a time when the NYSE is facing increasedcompetition from alternative trading systems and has drawn criticism forsome of its monopolistic rules.

Just a month ago, the chairman of the Securities and Exchange Commission,Arthur Levitt, called on the exchange to do away with a rule that prohibitsmembers from trading many NYSE stocks in an off-exchange setting. The stocksthat fall under this so-called Rule 390 are of blue-chip companies such asInternational Business Machines Corp. and General Electric Co.. Tradingvolume averaged 744.2 million shares a day in the quarter, up 3.5 per centfrom 719 billion in the year-ago period but down 7 per cent from 801.5million shares a day in the second quarter. Rising interest rates thissummer dampened investor enthusiasm for stocks and cut trading volumes.In the third quarter, 33 new companies listed their shares on the exchange,down from 43 new listings in the year-ago period.

For the nine months, the NYSE earned $76 million onrevenues of $551.2million, compared with a $93.9 million profit on $540.9 million in revenuesa year ago.