Standalone, niche marts can still thrive

By Ros Krasny

NEW YORK (Reuters) - The merger mania that has brought many small exchanges under the wing of huge mega-marts in recent years will go only so far, officials from a number of exchanges and trading venues said on Tuesday.

And if large, publicly owned exchanges become complacent or too focused on the pursuit of shareholder value versus their customers' interests, niche players can thrive, they said.

"You will always see strong, local sort of regional exchanges. I think if you run that business efficiently, you could always do that," Magnus Bocker, president of Nasdaq OMX Group Inc (NDAQ.O), said at the Reuters Exchanges and Trading Summit in New York.

Nasdaq OMX has been among the examples of a large exchange, the U.S. equities mart Nasdaq, expanding by bringing other exchanges under its wing.

In 2008, following the addition of OMX's cluster of northern European equity marts, it was the world's leading stock exchange by value of trades.

"A market economy will always see to it that you have strong niche players," Bocker said. "It could be a strong brand name in that local market, or being especially good at leveraging technology."

Participants at the summit represented exchanges ranging from CME Group, the world's biggest derivatives mart, to upstart Canadian stock trading venue Alpha Trading Systems, which hopes to go from zero to 40 percent of the country's equity market within a few years.

The CEO of Toronto-based Alpha, Jos Schmitt, said large exchanges tended to enter cycles of complacency that gave niche players a chance to thrive.