Exchange makes pounds 41.5m provision

The London Stock Exchange more than doubled its operating surplus in the year to March before making a pounds 41.5m provision to cover a two-year cost-cutting programme following the loss of its Talisman settlements income to Crest. The loss of that function is expected to reduce the LSE's income by up to pounds 60m.

Gavin Casey, the Exchange's chief executive, said good progress had been made in reducing its cost base, which fell during the year by 24 per cent to pounds 122.4m. As a result, he announced a pounds 10m rebate to the LSE's member firms.

Mr Casey said: "The strong financial performance this year, and our progress on financial restructuring, puts the Exchange on a sound footing for the next stage of our development."

Income was maintained at pounds 191.8m (pounds 196.1m) thanks to continued buoyancy in listing and trading. There were a record 431 new UK and international companies listed on the main market and AIM during the year, almost one- fifth higher than in the previous period.

Trading also reached record levels, with UK equity turnover rising by 16.3 per cent in the year, and international equity trading up by more than 28 per cent.

Mr Casey, who was appointed last August to replace the Exchange's ousted head, Michael Lawrence, said: "We have a clear agenda for the year ahead - to complete the changes agreed in our strategic review and to grow our business by providing the users of our markets with highly relevant services at effective cost."

He dismissed rumours that the Exchange was planning a flotation in the near future despite its appearance on a semi-official list of flotation candidates.

The provision in the accounts marks the end of a decline in the numbers of staff working at the Exchange. In the mid-1980s, the LSE's payroll amounted to about 3,500 people. By the end of the restructuring programme that will have fallen to 550. One new addition was announced yesterday with the appointment of Peter Meinertzhagen, chairman of ABN AMRO Hoare Govett, to the LSE's board.

Mr Casey said the order-driven trading in FTSE 100 stocks was on track to meet its target start date in October. Once implemented, the system where dealers post quotes on a screen and then agree a price over the telephone will be replaced for the market's largest stocks by a wholly automated system.

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