* Q2 EPS C$0.64 vs year-earlier C$0.63
* Revenue rises 3 pct
* Operating expenses up 8 pct (Adds comments from conference call)
TORONTO, July 28 (Reuters) - TMX Group Inc (X.TO), owner of the Toronto Stock Exchange, reported a marginal increase in quarterly profit on Wednesday, crediting technology investments that it said helped it to hold on to market share despite a rise in competition.
TMX Group, which also owns the the small-cap TSX Venture Exchange and the derivatives-focused Montreal Exchange, said volume of securities traded on the main Toronto exchange fell 21 percent in the quarter, even though record daily trading volumes were achieved in May.
The TMX said its market share was stabilizing despite a sharp rise in competition from alternative markets.
TMX Group's share of equity trading had fallen to just over 70 percent by June from nearly 90 percent a year earlier, according to public data.
"We will continue to make the investments necessary to compete hard for our clients' business," Chief Executive Tom Kloet told analysts on a conference call.
"We believe that our technology investments as well as our recent pricing adjustments are critical factors in maintaining TMX Group's equity trading market share, which has been largely stable since the beginning of the year," he said.
TMX says it's on the lookout for growth opportunities at home and abroad and is open to organic growth or to mergers or acquisitions.
In the second quarter, the Montreal Exchange launched a cash-settled futures contract based on Canadian heavy crude as Canadian oil production rises and oil traders look for new ways to manage risk.
"We have, as you know, a strong balance sheet and we have the capacity for those opportunities," said Michael Ptasznik, the group's chief financial officer. "We are looking at numerous opportunities."
TMX Group reported profit of C$47.6 million ($46 million), or 64 Canadian cents a share, in the second quarter, compared with C$46.9 million, or 63 Canadian cents a share, a year earlier.
Revenue rose about 3 percent to C$142.7 million despite a 14 percent fall in revenue from the company's cash markets segment.
Analysts, on average, had expected the company to earn 67 Canadian cents a share, on revenue of C$141.6 million, according to Thomson Reuters I/B/E/S.
Operating expenses rose 8 percent to C$73.8 million, due to higher costs related to technology initiatives, short-term performance incentives and commission-based compensation.
Cash flows from operating activities rose 47 percent to C$73.8 million.
Shares of TMX fell 0.95 percent to C$29.04 in early trading on Wednesday on the Toronto Stock Exchange.
$1=$1.04 Canadian Reporting by Gowri Jayakumar in Bangalore and Pav Jordan in Toronto; Editing by Peter Galloway