LSE trading slows in Q2, seeks tech boost

LSE trading slows in Q2, seeks tech boost

London: The London Stock Exchange is still looking for ways to improve its British equities trading service after its recent success in stemming a long-term decline ran out of steam in the second quarter.

The British exchange said it had identified lower fees at its main clearing services provider LCH.Clearnet and a trading system upgrade over the next week as key to boosting trading activity.

Chief executive Xavier Rolet said: “Recent announcements of fee reductions for clearing by third-party providers will help reduce the total cost of trading".

“The completion of the Millennium upgrade is potentially significant and should allow them to compete more effectively," said Simon Maughan, co-head of equities at broker MFGlobal.

“The trend is clear, however. If the technology is not effective they will have to cut costs further to maintain market share."

Cheaper alternative trading venues like BATS, Chi-X and others have won substantial market share from the LSE since it lost its trading monopoly in Britain in 2007 when the EU deregulated equity markets.

LCH.Clearnet said in August it would introduce free equity clearing on 1 October for firms trading high volumes of British equities, a move that was welcomed by the exchange.

The LSE is also bullish about its technology project that will see an upgrade of its pan-European trading system Turquoise next Monday to a new, faster system from its MillenniumIT unit.

The exchange’s main British order book Sets was scheduled to move to MillenniumIT on 1 November, the LSE said.

The LSE said traded equity activity for the five months to the end of August was up 12% on the year but volumes declined in the second quarter.

“Actions taken to improve UK equities trading are taking effect, with share of trading resilient in the past few months," Rolet said.

Its Italian subsidiary Borsa Italiana saw traded equities rise by 20 percent.

Average daily value traded in the UK for the five-month period was 5 billion pounds ($7.94 billion), but fell to 4.2 billion pounds a day in the second quarter to date.

The LSE said its share of total British cash equities had been broadly stable over the period at 57.6%.

The exchange’s cut-price alternative trading venue Turquoise was stable over the period with 3.2% market share in Europe but became the largest in so-called dark pool trading.

The LSE became a majority owner of Turquoise in December in an attempt to address a chink in its business model.

LSE shares were down 2% at 3:55pm.