NYSE Euronext (NYX) won't pursue market share at the expense of profitability in the battle for 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.

"We will not chase share at the expense of profitability or join the race to the bottom being pursued by some competitors," he said.

NYSE Euronext reported Thursday that 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 sharply in early trading, up 9.6% to $24.67.

Niederauer acknowledged that the 50% U.S. market share target for Tape A securities he laid out earlier this year was "aggressive," especially as the exchange has seen its share slide by 150 basis points over the quarter.

In the U.S., Niederauer said, alternative trading platforms made inroads because incumbent exchanges' prices were too high and their technology wasn't up to snuff.

While NYSE Euronext has updated its technology - it's in the process of rolling out the Universal Trading Platform, a faster engine covering all asset classes - Niederauer said that upstart competitors' prices are likely to remain below NYSE Euronext's "for some time."

Michael Geltzeiler, chief financial officer for NYSE Euronext, said in an interview that the pricing issue remains a challenge because "some of our competitors don't seem to have a profit motive."

Bank consortiums back many of NYSE Euronext's smaller competitors, allowing them to operate at much slimmer margins than major exchanges - or at an outright loss, as some market observers suggest.

Niederauer touted the March launch of NYSE Arca Europe, the exchange's entry into the crowded MTF field, and its European dark pool platform SmartPool, debuted in February, as evidence that NYSE Euronext is "playing offense" in ways it hadn't done in the U.S.

Another European positive came Thursday with the announcement that London-based clearing entity LCH.Clearnet would reduce fees for clearing cash equities trades by about one-third.

Since NYSE Euronext is LCH.Clearnet's primary customer in that business, Niederauer said the exchange will be able to pass savings to customers.

"That's one place where I'd been worried about our ability to compete, on the relatively high clearing fees," he said.

High-frequency traders traditionally make up about 40% of U.S. cash equities volume, Geltzeiler said, though that figure has likely increased as banks and retail traders have stepped back from a volatile market.

That shift hasn't helped NYSE Euronext, he said, "but when we get back to a more normal [customer] mix, that will bode well for us," Geltzeiler said.

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