On returning to London last week from India, a market structure consultant compared the London Stock Exchange’s approach to developing its relationships with younger exchanges in emerging markets with the British East India Company, famously the commercial arm of British colonialism in the 17th-19th centuries.
In November, long-defunct but recently revitalised venue the Delhi Stock Exchange (DSE) signed a contract with the LSE to receive new trading technology through LSE’s MillenniumIT subsidiary. Earlier in the year, LSE CEO Xavier Rolet was signing a deal with the Mongolian Stock Exchange, not only to supply tech but also for an LSE management team to go out and “oversee its development and privatisation”. Last year, the LSE signed up to provide technology and related services to a new cross-market clearing in infrastructure across central and eastern Europe.
The consultant, a considered and well-respected man, meant no insult and implied no political incorrectness. And he was certainly not alluding to any colonial motives of oppression. Rather, he was drawing a contrast between the somewhat transactional sales approach of certain other large exchange groups and the British exchange’s willingness to engage and partner with emerging and developing market bourses at a very local level. Under Rolet, the LSE seems keen to sell in a variety of associated services with its technology, generating revenues that, it hopes, will grow over time, while also embedding the exchange in the host market’s infrastructure.
In truth, the comparison has its limitations, but the LSE has had to differentiate to get a toehold in a market to which it is a late-comer. Nasdaq OMX’s INET platform is in situ in sophisticated financial centres such as Singapore, Sydney and Zurich. NYSE Euronext’s Universal Trading Platform is being adopted in Warsaw, while its NYSE Technologies subsidiary is developing a worldwide network of data centres.
Both Nasdaq OMX and NYSE Euronext work closely in partnership with the client national bourses, but the LSE seems to be going the extra mile in its bid for a greater share of the global exchange technology market.