The London Stock Exchange said volatile markets boosted trading volumes in the first five months of its financial year, but its shares fell on continued concern over competition.
In a statement on Friday, the LSE said the daily average number of trades on its flagship SETS trading platform rose to 699,000 in the five months to Aug. 31, an increase of 27 percent on the same period last year.
The increase in trading activity came as investors traded more frequently in response to sharp price fluctuations triggered by the credit crunch.
Busier trading benefits the LSE, which earns a high proportion of its revenues by levying fees on its customers.
The impact of steady increases in trading activity has over the past year been partly offset by tariff cuts introduced by the LSE in response to competition from newly-launched operators such as Turquoise and Chi-X.
In a research note, Citi analyst Daniel Garrod said the LSE statement "fails to add anything new about defence against competition."
"The short-term outlook is challenging with at least three new competitors being launched September to November 2008. These are likely to put pressure on pricing and try to export chunks of liquidity," Garrod wrote.
A fresh competitive threat to the LSE emerged on Friday with the launch of Nasdaq OMX's Nasdaq OMX Europe platform, which will allow investors to trade 600 European securities including 25 FTSE 100 stocks.
By 0935 GMT, LSE shares were down 3.7 percent at 802.5 pence, while the FTSE 100 share index was 1.2 percent lower.
New York-based Nasdaq made a 12.43 pound per share cash offer for the LSE in 2006, but the LSE rejected it as too low.
The British exchange operator fought off a total of five takeover attempts between December 2004 and February 2007, and its shares reached a high of 20 pounds in January 2007.
The exchange also said on Friday that tougher market conditions had sharply reduced the number of companies seeking a stock market listing.
There were just 105 initial public offerings at the LSE and Milan-based subsidiary Borsa Italiana during the five months to August, down from 239 a year earlier.
"The overall resilient performance of our operations in highly uncertain market conditions, and our continued business development, position us well to meet the challenges and realise the opportunities ahead," LSE Chief Executive Clara Furse said.
The LSE added that growth in trading volumes had continued into September, fuelled in part by a new tariff structure.
The exchange operator reports half-year results on Nov. 13.
