NYX Nyse Euronext

The prospect of another price war among U.S. stock exchanges has come down over the past year, and any such moves probably won't have much impact on the overall market share picture, top executives of NYSE Euronext (NYX) said Wednesday.

A shaky truce seems to be holding among top U.S. stock trading venues, nearly a year after NYSE Euronext battled Nasdaq OMX Group Inc. (NDAQ) as well as electronic platforms BATS Exchange and Direct Edge to offer lower trading fees.

"We're reaching a level where marginal pricing changes don't have the elasticity that they did two to three years ago, and recent changes that have been made don't yield the same results they did at the beginning," said Joseph Mecane, head of U.S. cash markets for NYSE Euronext, at an investor presentation Wednesday.

Lawrence Leibowitz, chief operating officer at NYSE Euronext, said he wouldn't rule out further adjustments to trading fees on U.S. stock markets - Nasdaq OMX, he noted, tweaked some of its pricing in recent days - but market operators have found there are limits when it comes to slashing a core source of revenue.

"Being aggressive on price cost [exchanges] money," Leibowitz said Wednesday. "We've reached a point where there's almost a stalemate."

Incumbent exchange operators NYSE Euronext and Nasdaq OMX saw the profitability of the U.S. cash equities business drop in recent years alongside the arrival of BATS and Direct Edge, consortium-backed startups that were able to operate on slimmer margins than their larger competitors.

Both BATS and Direct Edge have broadened their ambitions over the past year, however. BATS last week launched a U.S. options market and plans to do a second U.S. equity platform, after gaining a foothold in European equities. Direct Edge looks to convert its two electronic trading venues to full-fledged exchanges in the coming weeks, pending approval from the Securities and Exchange Commission, and will implement new trading technology later this year.

Leibowitz suggested that those plans carry costs for the upstarts, making it tougher for them to offer bargain-basement pricing on stock transactions.

"BATS and Edge, at some point, want to be something when they grow up," he said.

While NYSE Euronext and Nasdaq OMX have seen their market share stabilize over the last six months, there are signs that price competition could resume. Direct Edge in February saw its combined U.S. market share slip to 9.6%, falling below that of BATS for the first time since March 2008.

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

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