NYSE Is Still No. 1, But Not By Much; In its 13-year history, ICE has built a sprawling global empire of derivatives exchanges and clearinghouses. It grew through acquisitions, transforming legacy institutions with technology

NYSE Is Still No. 1, But Not By Much

BRADLEY HOPE

Feb. 11, 2014 7:31 p.m. ET

The venerable New York Stock Exchange is hanging by a thread to its place as the country’s top trading venue as measured by volume. Its new head’s response: He doesn’t care.

IntercontinentalExchange ICE +2.06% Chief Executive Jeffrey Sprecher’s attitude toward market share, expressed on an earnings conference call Tuesday, is an early glimpse of the type of big changes expected as he puts his stamp on the iconic Big Board. That comes three months after ICE took over the NYSE’s parent company for more than $8 billion.

Mr. Sprecher has set in motion a plan to sell noncore businesses and move some jobs from New York to Atlanta, where ICE is based, to maximize savings from the merger. All told, he is expected to slice the combined company’s head count—currently about 4,100—by more than a third, according to analysts.

But the direction Mr. Sprecher chooses for NYSE may be his most scrutinized decision. One reason Mr. Sprecher can afford to tinker with the exchange is that it is such a small part of ICE’s business; NYSE stock trading will account for just 6% of total revenue after the sale of ICE’s European exchange Euronext, according to the company.

On Tuesday’s call, he made clear that he is more interested in shareholder value than maintaining the exchange’s top spot by volume. “Our strategy around here has never been to run the business for market share and bragging rights,” he said.

Rival exchange operator BATS Global Markets was just a fraction of a percentage point shy of overtaking NYSE in January, handling 20.54% of U.S. trading volume compared with NYSE’s 20.58%, according to Sandler O’Neill + Partners. BATS was able to leapfrog ahead of Nasdaq OMX Group Inc. NDAQ +2.29% ‘s 20.01% share with the addition of Direct Edge Holdings LLC, a merger that closed at the end of last month.

ICE said fourth-quarter revenue more than doubled, but acquisition costs and other one-time items led to an overall loss of $176 million, or $1.83 a share, compared with a profit of $130 million, or $1.76 a share, in the year-ago period.

In its 13-year history, ICE has built a sprawling global empire of derivatives exchanges and clearinghouses. It grew through acquisitions, transforming legacy institutions with technology and making them into leaner businesses.

Taking over NYSE, however, brings a different set of challenges related to the hypercompetitive and politically sensitive U.S. stock market.

“Acquiring NYSE is unlike anything ICE has done before, particularly because it is an institution with so much tradition and of such importance both symbolically and literally to the U.S. economy,” said Justin Schack, managing director of Rosenblatt Securities Inc., which advises institutional investors.

ICE’s original interest in the deal was gaining control of NYSE’s London-based derivatives market, Liffe, which is a natural fit for the ICE group of exchanges. But it was the NYSE’s equities business that has thrust Mr. Sprecher into the spotlight.

He already has gained a reputation for frankness. Last year, he upended a debate about a system of paying rebates to brokers who trade on an exchange or venue by saying the practice should be “illegal” and that the markets were increasingly perceived as “unfair.”

Integrating the cultures of ICE and NYSE is one of the first obstacles he faces.

“The challenge for us is, can we take this lightweight, Internet-based company, based [near Atlanta], and marry it with something iconic?” he said during an event in Georgia last month.

Previous NYSE CEOs had to be careful about making any deep changes to the equities business because its bottom line was so related to volume of trading. But with ICE anchoring the company now, Mr. Sprecher has less to lose.

“There is no doubt he has greater flexibility to experiment,” said a person familiar with ICE’s internal discussions about NYSE. “Jeff has far more latitude to experiment and he is not beholden to old-fashioned ideas about the exchange.”

So far, Mr. Sprecher hasn’t made any major decisions on the NYSE’s direction, but he has discussed ideas to reduce the fragmentation of the markets and devise products that will bring more large investors back to the exchange, according to people familiar with his thinking.

“The appeal is that he has a 35,000-foot view of market structure,” said Jonathan Corpina, senior managing partner of Meridian Equity Partners, based on the floor of the NYSE. “He’s thinking about what are some of realistic ideas that could help our markets.”

Several years down the road, Mr. Sprecher could even sell the stock exchange altogether, said Diego Perfumo, an analyst at Equity Research Desk LLC, which advises hedge funds.

“There is no reason for ICE to own the equities exchange,” he said. “It bought NYSE for the futures business, so it makes sense for them to sell the parts they don’t need for their core business.”

ICE declined to comment Tuesday, but it has said in the past that it has no plans to sell the NYSE equities business.