By Daisy Ku

In the worst economic crisis in 80 years, her defensive strength in seeing off bidders who could have been welcome partners could yet turn on the 51-year-old Canadian, analysts say.

Born to Dutch parents, Furse oversaw the acquisition of Borsa Italiana last year but has failed to build up a meaningful derivatives business, making the group more vulnerable to economic downturns.

"The bourse is essentially still a cash market and is increasingly competing on price. The lack of a credible derivatives strategy is the LSE's Achilles heel," said Monovision managing director Herbie Skeete.

Furse, a multilingual ex-derivatives trader, was parachuted into the London Stock Exchange in January 2001, half a year before the exchange floated on its own market.

Made a Dame of the Court this summer, she was the first woman to lead the venerable gentlemen's club, playing a defensive game from the outset as London vied to become the financial center of the world.

She successfully saw off hostile takeover bids from Australian group Macquarie, German exchange Deutsche Boerse and transatlantic group Nasdaq OMX .

But a herd of brash new rivals springing up after the introduction of new European Union financial rules known as MiFID has forced the LSE to cut prices.

Nomura owned Chi-X, broker dealer-backed Turquoise, Nasdaq OMX Europe and America's third largest exchange BATS have grabbed about one quarter of trading in FTSE100 blue chips.

Such multilateral trading facilities (MTFs) offer cheap and fast execution, with lean structure and trading engines at just one-fifth the costs of the LSE.

STEP DOWN

The British bourse has begun planning to find a replacement for its chief, but the search takes place against a tough backdrop, with LSE shares tumbling 70 percent this year, as the global economic crisis deepens.

No formal timetable has been put in place, but Furse is likely to step down around 2010 as she wraps up the integration of Borsa Italiana, her biggest deal.

"I'm here. I remain fully committed to this job. Am I going to be here forever? No," she said after delivering half-year results on Thursday.

Some shareholders may not be unhappy with Furse's departure, remembering how they missed a chance to cash in when she rejected bid offers well above the LSE's current price.

And the bourse's outage on September 8 -- the worst in eight years -- could not have come at a more embarrassing time, when markets rebounded worldwide in one of the busiest trading days of the year following the bail-out of U.S. mortgage firms Fannie Mae and Freddie Mac .

Internal candidates thought to be in the running for the top post include deputy chief executive Massimo Capuano, chief financial officer Doug Webb, director of equity markets Martin Graham and chief information officer David Lester.

Any new chief will be facing the fast rise of competitors, rapid consolidation and breakneck speed technological change.

But whoever takes the helm, he or she might well hope markets look just a bit better by 2010.

(Editing by Douwe Miedema)