The chief executive of Nasdaq OMX Group Inc. (NDAQ) said a nascent swaps-clearing platform represents the single biggest growth opportunity for the exchange operator, which reported a 31% drop in second-quarter profit Thursday.

Nasdaq OMX is working to diversify as rivals chip away at its U.S. cash equities market share and the listings business has been hamstrung by the global recession.

The International Derivatives Clearing Group, a new Nasdaq OMX subsidiary targeting the $419 trillion interest rate swaps market, is one of several derivatives-related ventures the company is pursuing to boost revenues.

"The economics on clearing business on swaps is quite attractive," said Chief Executive Bob Greifeld, estimating the venture's profit potential at nine figures per year.

Nasdaq OMX posted second-quarter income of $69 million, or 33 cents a share, down from $100 million, or 47 cents, a year earlier. Excluding restructuring and other charges and assuming the acquisition of the Philadelphia Stock Exchange had been completed a year earlier, earnings were flat at 47 cents.

Shares were recently 1.4% higher at $21.97.

Nasdaq OMX's revenue decreased 12% to $768 million, sliding 4.7% excluding rebates and fees to $246 million. On a pro-forma basis, revenue slipped 5.6% and adjusted revenue dropped 13%.

Analysts polled by Thomson Reuters expected earnings of 47 cents on revenue of $369 million.

Nasdaq OMX's U.S. cash equities business, its biggest source of trading revenue, has been squeezed this year by intense price competition from smaller competitors BATS Exchange and Direct Edge, as well as archrival NYSE Euronext (NYX).

Thanks in part to an inverted pricing structure implemented at its Nasdaq OMX BX stock platform, the exchange operator's sliding U.S. market share has stabilized, rising in July to about 22%.

However, pricing at Nasdaq OMX BX is set to rise in September, and the company's share of U.S. cash equities remains well below the 27% it claimed in January.

Revenue from issuer services has also taken a hit; delistings continue and the initial public offering market has been sluggish, though Nasdaq OMX on Thursday welcomed chip company Avago Technologies Ltd. (AVGO) in what Greifeld hailed as the biggest U.S. IPO this year.

Derivatives appear more attractive to Nasdaq OMX as a result, and the company looks to boost business on both sides of the Atlantic.

In U.S. options, where Nasdaq OMX had about 18% of the market last month, it is collecting more fees on its Nasdaq Options Market platform. Across the pond, Greifeld detailed plans for a U.K. power market that will include spot and futures contracts.

But he was most optimistic about the IDCG, which has test-cleared $450 billion in contracts since launching earlier this year and now counts 12 participants on board.

The venture faces stiff competition from LCH.Clearnet, the U.K.-based clearing entity that dominates the business, and Chicago-based CME Group Inc. (CME), which looks to tie interest rate swap clearing to its powerhouse rate futures complex.

Nasdaq OMX is pursuing swaps as financial regulators on both sides of the Atlantic push central counterparty clearing as a way to reduce risk in over-the-counter markets.

In late June the IDCG signed up Bank of New York Mellon Corp. (BK) as an investor, and the derivatives brokerage firm MF Global Ltd. (MF) has participated in the venture since launch.

In an interview, MF Global CEO Bernard Dan said he saw activity at IDCG "slowly building" as over-the-counter markets adapt to clearinghouses.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com; and Kerry Grace Benn, Dow Jones Newswires; 212-416-2353; kerry.benn@dowjones.com