London Stock Exchange thrives and boss insists new trading platform “not a stitch up”

LONDON Stock Exchange Group gave firm evidence that the capital’s position as a global financial centre is safe even while share prices fall behind rivals and a dearth of new listings hits City profits.

The Exchange itself, at the heart of the Square Mile since 1801, is shifting from being a traditional trading floor to a high-tech business that sells sophisticated tools to an ever wider array of investors.

In the first half of the year revenues rose 12% to £4.18 billion, though profits fell 18% to £662 million. That should correct for the full-year, say analysts.

The LSEG is at the centre of a City squabble over a new market designed to help improve small firms’ access to liquidity and boost stock listings.

There is a clear gap between the value of shares listed in London and in New York, which encourages floating companies to look overseas.

Critics says the Intermittent Trading Venue (ITV) is a stich-up between the LSEG and the government that edges out genuine innovation from start-up markets.

One rival said: “It’s fair to say the LSEG isn’t exactly renowned for innovating to grow, it’s more a story of acquisition, so when we have disruptive challengers in play are they encouraging them to join the fight, or looking to out manoeuvre them?”

CEO David Schwimmer insists the ITV won’t be a monopoly and that smaller players will embrace it over time. Last December he unveiled a 10-year deal with Microsoft to offer new trading tools that should enable all investors better access to the company’s vast array of data.

Microsoft took at 4% stake, but Schwimmer is dismissive of the idea that could one day lead to a full takeover. “It’s not on the cards,” he told the Standard.

Customers will begin to see the true benefits of the Microsoft deal in 2024. He said today’s City traders are “using a hotch-potch of different tools many of which are 20 years old”.

LSEG said first-half growth in data and analytics, which makes up the bulk of its income, was 7.6%, but basic earnings per share fell 21.2% to 77.2p, hit by a higher effective tax rate.

Schwimmer added: "Data & Analytics is growing faster than it has for many years, with the ongoing improvements to our offering and strengthened customer relationships increasingly reflected in financial performance.”