London: The London Stock Exchange Group said weak trading cut first-quarter revenues by 8%, beating forecasts but highlighting the challenge facing new chief executive Xavier Rolet, who plans cost cuts and new tariffs.
The group, which also run the Milan bourse, made revenues of £161.9 million (263.4 million) in the three months to end-June, versus £176.3 million a year ago.
Shares in LSE rose on the results, which were better than an average forecast of four analysts of £151.4 million, adding 2.3% by 12:37pm to 667-1/2 pence a share.
“While market conditions are likely to remain challenging in the near term, the Group is taking actions to ensure we are in good shape and responding fast to changing markets,” said Rolet.
“A new, leaner organisation structure is taking effect, new trading tariffs for UK cash equities trading have been announced, and work continues to ensure the Group is well placed to capture market opportunities,” he added.
In the UK, LSE saw a 43% plunge in year-on-year average daily value traded in June, following a 37% decline in May and a 36% drop in April.
Analysts expect the cash trading business to remain weak as the stock market enters a quiet summer.
The LSE has responded by announcing a new tariff structure effective September to encourage trading as its market share fell to 70% in June from 80% at the start of the year.
It is also cutting about 10% of its staff to save costs, people familiar with the matter have said.
The LSE on Wednesday said “cost savings will arise from a reduction in headcount, with employee consultation currently taking place.”
On a quarterly basis, LSE revenues increased 5% as cash trading revenues improved over the fourth quarter to end March.
Capital-markets revenues increased to £37.5 million in the first quarter from £36.5 million in the fourth quarter, despite dropping 20 percent on a year-on-year basis.
The post-trade division generated revenues of £32.1 million, accounting for about one-fifth of the total. That was thanks to increases in interest from higher levels of margin and default funds held reflecting the growth in volume of Italian cash equities and derivatives trading.