London Stock Exchange Defence Blossoms
With the London Stock Exchange about to unveil its defence strategy against a £2.7 billion bid by major shareholder Nasdaq, new record trading figures have given the LSE a big boost in its fight to remain independent.
Chief Executive, Clara Furse’s main line of defence is that the Nasdaq bid is “cheap” in the context of the exchange’s recent performance in world markets. The new results to be announced this week show the LSE to be the fastest growing stock market in the world.
The LSE raised £27.9 billion ($54.5bn) last year, 71pc up on the previous year. This is said to include £10.3bn from businesses which would normally be expected to use the American markets.
The value of share dealing was also up by more than 36pc at £142bn ($277bn). It’s also reckoned that seven of the LSE’s best trading days occurred in December, a month of restricted opportunities to trade.
In the defence document, Clara Furse is expected to return funds to shareholders and promise a dividend rise of more than 50pc in the context of record profits.
As always as of late the hedge funds, which own 30pc of LSE shares, hold the key to its survival. If Furse can persuade them to be patient and await results, she may force Nasdaq on the back foot.
Nasdaq CEO, Robert Greifeld, has already confirmed that he will set up a rival exchange in London if he fails to secure the LSE. New regulations from the European Union mean that the field will be open to all-comers soon. With Project Turquoise promised from a medley of banks, and tiny Plus Markets set to tilt at windmills, the LSE board may not be too worried at that prospect. London is its home turf, after all, and a few choice tie-ups, especially on the derivatives side, would strengthen its hand.
This month will see the emergence of a much clearer picture and greater definition added to the parties’ positions.
