LSE’s new boss tightens grip on clearing house

THE new chief executive of the London Stock Exchange made a bold early move today, splashing out £384 million in a deal to take the company’s stake in clearing house LCH above 80%.

That deal comes amid concern about how £70 billion worth of derivatives contracts held by EU institutions will be traded post Brexit.

David Schwimmer, the former Goldman Sachs man appointed to the LSE last April to replace ousted Xavier Rolet, shrugged off the Brexit fears.

He said the deal reflects “continued confidence in LCH’s opportunities for further growth as it develops its business in partnership with its customers”.

Schwimmer only started his new role in August but has moved quickly. The extra 15% stake in the LCH will come from various banks and financial institutions including Deutsche Bank, Nasdaq and Nomura.

LSE shares moved up 45p to 4331p on the news. The LCH is a vital cog in the trading world, especially in currency and interest rate derivatives. Banks fear that stricter supervision of clearing houses by the EU post Brexit could force them to move business to Europe.

Today’s deal suggests confidence from Schwimmer that the matter is likely to be resolved. American regulators are on the UK’s side, warning EU banks they could be barred from US futures markets if the EU persists.

Otherwise, the LSE is doing well. In the quarter to September revenue rose 8% to £522 million.

Schwimmer added: “Since I joined LSEG in August my initial impressions of the group’s strengths have been reinforced as I have spent time with our businesses and met with key stakeholders.

“The group has world-class assets, a strong financial position and a proven strategic approach. As today’s results show, we have a great platform from which to grow.”