03 August 2016

Financial Times: ICE backs London but admits Brexit fears

Intercontinental Exchange has talked up the City of London’s prospects, despite admitting that fears of a Brexit vote were behind its decision not to bid for the London Stock Exchange Group.

Since the UK voted to leave the EU in June’s referendum, some bank and trading executives in the City have said they were examining alternative bases for their businesses — although none has made any firm decision to leave the UK.

However, on Wednesday, the US exchanges operator said it was hopeful of retaining its extensive operations in London, where it operates the infrastructure for futures trading and clearing.

“Since the Brexit vote we’ve had active dialogue with senior officials in the UK government to the types of policies that facilitate our continued investment,” said Jeff Sprecher, chief executive of ICE, during a conference call with analysts. “We’re very optimistic about the government’s focus on preserving the competitive environment for business.”

His comments came as the exchanges operator announced plans for a 5-for-1 stock split and a share buyback programme of up to $1bn. ICE has a market capitalisation of more than $33bn.

But Mr Sprecher admitted that Brexit uncertainty was the reason ICE did not proceed with a planned bid for the LSE in May, or attempt to break up the UK group’s planned all-share merger with Deutsche Börse.

“The way the deal was lining up, it was orchestrated so that we were going to, if we entered the deal, have to put a number on the table right ahead of the Brexit vote,” said Mr Sprecher, citing the influence of ICE’s UK board members, who include former UK foreign secretary William Hague, in its calculations.

“So we went out and started talking to our UK colleagues to try to gauge where we thought the vote was going to come up.” he explained. “And, honestly, we came to the opinion that the UK was probably going to leave. And so we decided … that it was not an appropriate time for us to do that transaction.”

In spite of the referendum result, LSE and Deutsche Börse shareholders have voted in favour of their deal, which is set to go before antitrust authorities in the UK, Germany and Brussels. [...]

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