The London Stock Exchange, which is under pressure to redefine its long-term strategy after its failed attempt to merge with Canadian counterpart TMX Group, is eyeing opportunities in settlement, its chief executive said this week. And it could be just the right time.
Xavier Rolet, LSE's chief executive, said the group was keen to build on its existing post-trade assets and take advantage of these inefficiencies. He said: "There is a very good opportunity in European settlement. The current system of central securities depositories is very inefficient and we feel we are well positioned with our assets in the area."
The exchange has been attempting to leverage these assets to boost revenues, with some success. On Wednesday the LSE reported a more than four-fold growth in its net treasury income from clearing operations, by 337 per cent to £25.8m, during the three months to the end of June compared with the same period last year. This is the income accrued on collateral posted with the LSE’s Italian clearing house, which is used to secure trades.
What could work in the LSE's favour are reports that the Bank of England has decided not to take part in a European Central Bank project to bring down settlement costs. The initiative, known as Target 2 Securities, or T2S, envisages the creation of a single platform for cross-border and domestic securities settlement against central bank money. Though work on T2S began in August 2008, the project has been beset by delays and in January the team running it admitted to a delay of about a year beyond its original implementation date of 2013.
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