The London Stock Exchange Group’s revenues in the quarter ended 30 June were £161.9 million, a 5% increase over the
£153.1 million reported in the previous quarter, but 8% down on the same quarter last year.
The quarter-on-quarter improvement was driven by a 15% rise in post-trade revenues, as well as 3% and 4% increases in the capital markets and information and technology segments respectively.
The strong post-trade revenue growth resulted from increases in interest from higher levels of margin and default funds held, which the exchange said reflects the growth in volume of Italian cash equities and derivatives trading.
The capital markets segment, which includes primary markets and trading, reported total revenues of £76.4 million in Q1 2010 compared with £73.9 million in Q4 2009. Total trading revenue was up 1% to £49.7 million, resulting from a 3% growth in cash trading revenue and a 2% increase in fixed income trading revenue. The LSE attributed the improved cash result to a 19% increase in total trading volumes in Italy but added that the total value traded in the UK declined slightly.
Derivatives trading revenue, however, dipped 10% because of increased price competition in Nordic markets and new tariff caps in the Italian market.
“The group has delivered a good overall quarter-on-quarter performance, though down on Q1 last year,” said Xavier Rolet, CEO of the LSE, in a statement. “Cash equities trading picked up in Italy and was broadly resilient in the UK in terms of value traded. The primary markets benefited from a flow of further issues even though IPO activity remained subdued, and our post trade business has strengthened over the previous quarter.”
Rolet added that while market conditions would continue to be tough, the group is taking a number of actions to ensure its continued success. Starting from September, the LSE will introduce a new trading tariff for its UK order books, which will charge an identical fee for both passive and aggressive trades and make discounts more achievable to the most active traders. The firm expects the new pricing model to boost trading levels.
In addition, Baikal, the group’s non-displayed multilateral trading facility and liquidity aggregation service, launched the smart order routing portion of its offering at the end of June. It will launch the non-displayed order book later this year following the completion of customer testing.