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NYSE Euronext (NYSE:NYX) is the world’s leading stock exchange in cash trading both in terms of volume and value and competes with Nasdaq (NASDAQ:NDAQ), Chicago Mercantile Exchange (NYSE:CME), Intercontinental Exchange, BATS Global and Direct Edge. The company derives almost half of its value from cash trading and listings. Below we look at the factors affecting NYSE’s market share in U.S. cash trading.

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NYSE’s Market Share of US Cash Trading Volume

NYSE’s market share of U.S. cash trading volume declined from 39% in 2008, to about 30% in 2010, due to increased competition among exchanges, including fully electronic exchanges like BATS Global and Direct Edge. The popularity of floor trading in NYSE is being steadily pushed aside in favor of electronic trading. NYSE has managed to mitigate the impact of the decline by drawing more business to its all-electronic Arca market.

With NYSE increasing focus on the technology of trading and having popular all-electronic exchanges (Arca and Amex) in its portfolio, NYSE will continue to hold on to its share of the market. Going forward, we expect NYSE’s market share of U.S. cash trading volume to stabilize at around 28%.

Our price estimate for NYSE Euronext stands at $35.51, implying a discount to market price.

Disclosure: No positions

Source: Electronic Exchanges Will Support NYSE Euronext's Market Share