By Jacob Bunge Of DOW JONES NEWSWIRES CHICAGO -(Dow Jones)- NYSE Euronext (NYX) and Nasdaq OMX Group Inc. (NDAQ) in October gained ground on smaller rivals that have cut into the exchange operators' U.S. business in the past year. Both companies saw their share of U.S. cash equities trade rise in October, while trading activity fell at Direct Edge and held steady at BATS Exchange. The major stock exchange operators have come under intense pressure from startup electronic platforms targeting the market with low prices and fast systems. October signaled that some recent advantages enjoyed by these competitors may have diminished--heavy trade in cheaply priced financial stocks like Citigroup Inc. (C), which buoyed Direct Edge in recent months, tailed off as investors reduced hedging activity and refocused on third-quarter corporate earnings and economic data. As U.S. cash equities trade ticked 3% lower from September levels to about 9.3 billion shares per day, NYSE Euronext saw its market share edge higher to 28.1%, while Nasdaq OMX's share jumped nearly two points to 24.8%. Overall stock trading volumes remained sharply lower compared to October 2008, when the financial crisis drove heavy activity across multiple markets. Kansas City, Mo.-based BATS saw its U.S. matched market share hold steady at about 9.5% for the month, while it claimed a record 3.7% of the European equity market via its one-year-old BATS Europe platform. Direct Edge, based in Jersey City, N.J., fell to an estimated 10.5% of the U.S. market, with business on its three exchange platforms down more than a full point from September. NYSE Euronext's European derivatives business took a hit last month, as a slide in fixed income and equity index futures trade pushed overall volume down 11% from September's levels. Executives at NYSE Liffe, the company's futures arm, anticipate a pickup in fixed income volume as the European Central Bank moves toward hiking benchmark interest rates, though it remains unclear when this might happen. In U.S. options trade, NYSE Euronext gained business following a September deal that saw the exchange company bring in seven banks and trading firms as equity partners in its NYSE Amex options exchange, helping lift its market share to 22.8%. Last week NYSE Euronext announced a similar gambit with its startup U.S. futures exchange NYSE Liffe US, which traded 22,000 metals and equity index contracts in October, rising from September levels. Nasdaq OMX's options business shrank in October to 20.2% of the U.S. market, with approximately 62 million contracts traded. The Chicago Board Options Exchange remains the largest U.S. options platform by volume. -By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com
