David Prosser: LSE makes up with some old friends

Outlook: The launch of Turquoise prompted a tacit admission from the LSE that it had been overcharging

It has cost the nine founders of Project Turquoise some £30m in investment costs – and the trading platform has yet to turn a penny of profit – but the scheme, hatched in 2006, is finally paying dividends. Yesterday, the nine investment banks who were so fed up with the LSE's services that they decided to launch a rival trading platform, sold 60 per cent of Turquoise back to the bourse. It will now put £20m into the venture – and merge its own Baikal "dark pool" technology into Turquoise – to bring it up to standard.

For the LSE, this deal is as much an expression of goodwill as a strategic move. Yesterday, it was keen to talk about cost savings and plans for expansion into Europe, but in truth, Turquoise will not do much to boost the LSE's market share, let alone its bottom line. What the joint venture with the investment banks really represents is rapprochement with these key clients, who for some time had felt exploited by London's fee structures.

To get an idea of the extent to which the LSE was perceived as overcharging, look back to August 2008, when it announced price cuts just weeks before the launch of Project Turquoise. At the time, it said that its revenues would have been down by about seven per cent, or £5m, had the new prices been in place over the previous quarter. To put that another way, the launch of Turquoise prompted a tacit admission from the LSE that it had been charging at least £20m-a-year too much.

For now, the LSE seems to have got the message. Not only have the investment banks forced it to offer them a better deal, they now have a partner to share the pain of turning Turquoise into a viable entity. Not before time, London has learned that the customer is always right.