NYSE Euronext CEO: Won't Join 'Race to Bottom' In Equities Pricing
April 30 2009 - 9:25AM
Dow Jones News
NYSE Euronext (NYX) won't pursue market share at the expense of
profitability in the battle for U.S. cash equities trading, its top
executive said Thursday.
Chief Executive Duncan Niederauer acknowledged in a conference
call that the exchange operator has taken hits on both sides of the
Atlantic as smaller electronic trading platforms have nibbled away
at NYSE Euronext's market share.
A host of multi-lateral trading facilities in Europe have drawn
high-frequency traders away from incumbent exchanges with more
favorable pricing schemes and speedy technology; in the U.S., BATS
Exchange and Direct Edge have made similar inroads.
NYSE Euronext has sought to compete, introducing changes to its
U.S. equities pricing scheme and launching its own electronic
platforms in Europe, but Niederauer said there is a limit to how
much the exchange will slash prices to compete.
"We will not chase share at the expense of profitability or join
the race to the bottom being pursued by some competitors," he
said.
Niederauer acknowledged that the 50% U.S. market share target
for Tape A securities he laid out at the exchange's investor day
earlier this year was "aggressive," especially as the exchange has
seen its share slide by 150 basis points over the quarter.
Separately, Niederauer said the exchange has signed up several
equity partners for its new U.S. futures exchange.
NYSE Liffe US, launched by the trans-Atlantic exchange operator
last year, will also be rolling out new products "in the near
future," Niederauer said in the conference call on NYSE Euronext's
first-quarter earnings.
The U.S. futures unit trades precious metals products acquired
from Chicago-based CME Group Inc. (CME), and in April switched its
clearing from CME to the Options Clearing Corp.
NYSE Euronext's first-quarter net profit fell to $112 million,
down 53% from a year ago, with net revenue flat at $1.11 billion,
below analysts' expectations.
The exchange boosted its cost-savings estimate for 2009 by $100
million after realizing $51 million in cost savings from the fourth
quarter last year, surprising many analysts.
Shares of NYSE Euronext rose in pre-market trading to
$23.12.
The company was formed in 2007 by the combination of NYSE Group
Inc. and pan-European bourse operator Euronext NV.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com