2nd UPDATE: Exchange Executives Cautious On Merger Response

Exchange executives watching this week's blistering pace of sector deal-making were keeping their powder dry on Thursday, offering only guarded observations on two giant mergers that are seen as complicated and uncertain but very formidable.

Nasdaq OMX Group (NDAQ), CME Group Inc. (CME) and CBOE Holdings Inc. (CBOE) are all seen pressured by the potential mergers of some of their biggest global rivals, with analysts and observers casting them as potential targets or acquirers.

"We're still digesting the information ourselves," said Jamie Parisi, chief financial officer for CME, speaking to investors Thursday. "It's just very early in the process."

On Wednesday NYSE Euronext (NYX) revealed that it was in advanced discussions over a possible merger with Deutsche Boerse AG (DBOEF, DB1.XE). The combined entity would align Europe's biggest futures markets and create the biggest global platform for listings and share-trading.

Shortly before, London Stock Exchange Group PLC (LSE.LN) and Toronto's TMX Group Inc. (TMXGF, X.T) said that the two market operators had agreed on their own merger, creating a significant transatlantic competitor in the shares of resource and clean energy companies.

For CME, Parisi said the merger of the NYSE Euronext and Deutsche Boerse derivatives markets in Europe meant the fusion of two "good competitors" for trading business in the region, a rising hub of energy hedging. "Putting them together will still be a good competitor," Parisi said.

"We'll still be able to compete with them in Europe," he said, declining to elaborate on CME's own views toward dealmaking. CME Chief Executive Craig Donohue has in recent months eschewed large-scale merger and acquisition activity, favoring a return of capital to shareholders.

Nasdaq OMX Group Inc. (NDAQ) will take a "rational" and "analytical" approach to the recent consolidation, according to Adena Friedman, chief financial officer for Nasdaq OMX.

Speaking to investors in a separate presentation, Friedman said the complexity of the cross-border deals announced this week will give her company time to evaluate the fallout and evolved competition--if the deals close. Both face scrutiny from a host of regulators and lawmakers on both sides of the Atlantic.

"Generally speaking, we don't see any significant competitive dynamic that changes in terms of what we are here to do," Friedman told investors.

William Brodsky, CEO of CBOE Holdings, sounded a similar note, though bringing together the U.S. options markets of NYSE Euronext and Deutsche Boerse's Eurex derivatives unit would amount to about 40.5% of the U.S. options business.

"I don't think anything we saw or talked about going on yesterday is going to change [competition] in a meaningful way," said Brodsky on a conference call discussing CBOE's fourth-quarter earnings Thursday.

More than CME or Nasdaq OMX, the parent of the Chicago Board Options Exchange has been seen as a potential takeover target, and its shares jumped Wednesday after the NYSE-Deutsche Boerse talks were announced.

"We look at every opportunity for growth," said Brodsky. "But I'm not going to comment on some of these broader macroeconomic issues," he said, referring to cross-border exchange deals.

Nasdaq OMX shares settled 0.9% higher Thursday at $27.82, while CME was 1.7% higher at $307.72. CBOE's shares rose 5.3% to $26.87.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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