LSE warns of tough times as revenue down in Q3

TRADING is expected to remain tough, the London Stock Exchange warned yesterday, as it revealed a slide in third-quarter revenues amid rising competition from rival share-trading platforms.

Revenues fell 9 per cent to 154.9 million as the LSE was forced to cut fees to try and repulse the threat from relatively new trading platforms such as Chi-X and BATS.

The London exchange has responded by cutting costs, including significant redundancies, and making acquisitions to defend its position and improve its technology.

Under new chief executive Xavier Rolet, the exchange is also negotiating with clearing houses Euroclear and LCH.Clearnet to try and get a cut in clearing and netting costs.

Doug Webb, LSE's chief financial officer, said: "I am sure there will be something coming out in the next little while on this – weeks rather than months."

On current trading, Webb said "conditions are expected to remain testing".

Although year-on-year revenues fell in the third-quarter to end-December, they were up 4 per cent on the previous three months.

Most of that drop came in cash equities trading revenue from the UK and Italian subsidiary Borsa Italiana, which fell a combined 29 per cent year-on-year in the quarter. Industry data suggests LSE's share of trading in stocks in the blue-chip FTSE 100 index is below 57 per cent this month.