Revenues from its post-trade services drove solid growth at the London Stock Exchange (LSE), for the financial year ending 31 March 2011, but the exchange may become embroiled in legal action over plans for its derivatives business.
According to its preliminary results statement, total income at the LSE rose 7%, from £628.3 million (€716.6 million) in 2010, to £674.9 million (€769.7 million) in 2011, contributing to an adjusted operating profit – before amortisation of purchased intangibles and non-recurring items – increase of 22%, to £341.1 million (€389 million)
Post-trade revenue grew by 30% to £150.6 million (€171.7 million) in 2011, from £116.2 million (€132.5 million) the previous year, while income from secondary markets activity – encompassing UK and Italian equity trading, derivatives trading and fixed income trading – fell by 9% to £166.3 million (€189.6 million), from £182.3 million (€207.9 million) the previous year.
Revenues also increased in technology services, up 23% to £48.6 million (€55.4 million), and information services, which grew by 10% from £39.4 million (€44.9 million) in 2010, to £48.6 million (€55.4 million) this year.
“We have made good progress,” commented LSE CEO Xavier Rolet. “The 22% increase in adjusted operating profit underlines our improved financial performance and we have taken significant steps in delivering on our growth strategy.”
“We continue to operate in a highly dynamic and evolving global industry. Enhancing our competitiveness and improving customer service remain key priorities. We are also fully focused on pursuing a range of growth opportunities which will remain pivotal to further progress in the year ahead,” added Rolet.
The LSE faces a busy few months as it works to launch a new derivatives platform using its Turquoise multilateral trading facility and complete its merger with Canadian market operator TMX Group.
Turquoise Derivatives plans to launch in the first week of June with products based on the FTSE 100 index, but faces a battle with rival derivatives trading platform operators who are reluctant to grant the required licenses to the indices they own. According to a source close to the situation, the exchange is planning to take its case to the European Commission's competition authority, although no formal proceedings have been initiated.
As part of the launch, the LSE has upgraded the SOLA trading platform owned by TMX Group so that it is capable of trading products other than the Nordic and Russian derivatives instruments that are already available.
With regards to its proposed merger with Canadian market operator TMX Group, which derives much of its value from future derivatives plans the exchange announced today that both firms have filed applications with the Canadian provincial securities regulatory authorities in Ontario, Quebec, Alberta and British Columbia to obtain approval for the merger.