NYSE Euronext said it sold a big stake in its U.S. derivatives trading platform to five powerful market players, following the pattern of exchange operators partnering with dealers in the face of possibly sweeping regulatory changes.

The transatlantic exchange operator, which runs the New York Stock Exchange, also posted higher-than-expected quarterly earnings on Friday, helped by clearing revenue and cost-cutting.

In the derivatives deal, the company sold a significant equity interest in its NYSE Liffe U.S. venue to Goldman Sachs , Morgan Stanley , UBS AG , hedge fund Citadel Securities, and Getco, a big electronic market maker. It said its new partners would help drive the futures business.

History clearly shows that some of the most successful ventures have come out of the semi-mutualized approach with the dealers, NYSE Euronext Chief Executive Duncan Niederauer said on a conference call, referring to shared ownership of business ventures.

The company said it will remain the largest shareholder of Liffe U.S. but did not disclose the size of the stake being sold or the terms of the deal.

Last month NYSE Euronext struck a similar agreement giving seven outside firms a stake in its Amex Options market -- propelling a so-called remutualization wave among exchanges and clearinghouses, which were mostly user-owned in the 1990s.

The wave includes deals by CME Group Inc , Nasdaq OMX and IntercontinentalExchange Inc and comes as U.S. and European regulators push more over-the-counter derivatives through transparent platforms.

It demonstrates the attempt by ... brokers and banks to 'spread their bets' in the derivatives marketplace, especially with pending regulatory changes in the OTC derivatives clearing arena, Sandler O'Neill analyst Richard Repetto said in a note.

NYSE Liffe, which could challenge derivatives giant CME Group, trades gold and silver futures and equity indexes and plans to expand into U.S. interest rate products. It is expected to log a loss of up to $30 million this year.

By selling most of it, most of those losses will accrue to their partners, said Fox-Pitt Kelton analyst Edward Ditmire.

The hope for them is that the partners grow the business until it's profitable ... and they would get a portion of those profits, he said. In either case, it's an improvement from owning all of a sub-scale loss-making business.

NYSE Euronext shares were down about 5 percent in afternoon trade in New York, in line with its peers. The shares have gained ground on traditional rival Nasdaq OMX this year as the company absorbed a handful of acquisitions and as it prepares to launch two high-profile data centers next year.


In the third quarter, net revenue was down 13.8 percent to $624 million, hurt by falling volumes, price cuts, and lower market share in U.S. and European cash equities.

Underlying costs dropped 10 percent, and management said more staff cuts would come this quarter and next.

Net earnings dropped 28 percent to $125 million. Excluding one-time items, the company said it earned $138 million, or 53 cents per share.

Analysts said earnings excluding one-time items were closer to 50 cents a share, 4 cents above the average Wall Street forecast, according to Thomson Reuters I/B/E/S.

Recent results have been a step in the right direction as management continues to realize synergies and control expenses, Credit Suisse analysts said in a research note.

NYSE Euronext, like Nasdaq OMX, has been under pressure from younger venues but has adopted new technology to speed up global trading. Its matched market share of NYSE-listed companies was 35.5 percent in the quarter, down from 42.5 percent last year.

However, its overall U.S. market share rose from July through September, and CEO Duncan Niederauer said the bourse's core businesses continued to stabilize.

NYSE Euronext runs exchanges in Paris, Amsterdam, Brussels and Lisbon, following its 2007 acquisition of Euronext. It is also a key player in the ongoing U.S. debate over dark pools, high-frequency trading, and other market structure issues.

The Big Board suffered dissemination delays and several locked quotes on Friday.

(Reporting by Jonathan Spicer and Daisy Ku; Editing by Rupert Winchester and John Wallace)