Jeremy Warner: Furse has had a good innings running the LSE

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The Independent Online

Outlook For any chief executive to survive as long as eight years in the hot seat, as Clara Furse has done at the London Stock Exchange, counts as some kind of achievement in itself. Yet, ultimately, the chief executive must be judged not by their longevity but by whether they leave the company in better shape than they found it. With Ms Furse, who bowed out yesterday, that question can be answered strongly in the affirmative. OK, so the LSE's share price is a pale shadow of the £20 it achieved during the takeover frenzy of late 2007, but it is also a good deal higher than it was when she started, which is more than can be said for the stock market as a whole. During that time, she has seen off five unwanted LSE suitors, completely overhauled its technology, grown earnings and revenues strongly, increased the product range substantially, merged with Borsa Italiana and made a reasonable fist of seeing off the upsurge in new competition that has resulted from the European Union's markets in financial instruments directive.

Ms Furse might be accused of failing to sell the exchange at a top of the market price when she had the chance but, thanks to the sovereign wealth funds of Dubai and Qatar, most LSE shareholders were able to exit their investment at those elevated levels anyway, and it is certainly the case that virtually all these takeovers would have been an unmitigated disaster for other LSE stakeholders. Several of them were highly leveraged, which makes you wonder where the LSE would be in today's credit squeeze environment had they succeeded. As it is, the LSE has survived as an independent entity to play its proper role in acting as a beacon for London as a financial centre. It is reckoned that every pound raised in primary offers on the LSE is worth tens more in City fees and trade.

Yesterday's results were faintly spoiled by a big goodwill write-off on the Borsa Italiana takeover, but this was only an accounting adjustment, and underlying profits were strong. Alternative exchanges are certainly making in-roads in shares trading, but they are not as big as you might expect and virtually all new issue business has remained with the LSE.

Xavier Rolet, the new man in the chief executive's shoes, says he has plenty of ideas on how to meet the competitive challenge, but obviously wants to keep them close to his chest, at least until he has conducted a thorough review of the business. The big story in stock exchanges used to be international consolidation; now the main challenge seems to be one of fragmentation. In any case, Ms Furse is a hard act to follow.

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