Clearing business a winner as London Stock Exchange beats its profits forecast

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The Independent Online

The London Stock Exchange yesterday appeared to show that chief executive Xavier Rolet's efforts to diversify the business are paying off.

After years of criticising rivals' "silos", made up of exchanges together with back office functions that clear and settle trades, the LSE showed the benefit of owning a clearing business, which helped it report a pre-tax profit of £180m, up 79 per cent, on revenues of £328m, up 9 per cent. The better-than-forecast profits were driven by the company's Italian clearing business, acquired with Borsa Italiana.

The exchange is keen to do a deal with LCH.Clearnet, which "clears" trades in London by sitting between buyers and sellers and ensuring trades proceed even if one side defaults.

However, Mr Rolet remained silent on the LSE's reported interest in buying the London Metal Exchange, just about the last remaining independent exchange left in the City.

With a huge field of bidders, the LME is expected to fetch a high price, but the LSE may have to pay it. The company is arguably still suffering from its failure to acquire Liffe, the London futures exchange. Liffe was snapped up by Euronext, the Continental bourses group since bought by the NYSE. NYSE Euronext's merger with Deutsche Börse, owner of Liffe's rival Eurex, is about to create a monopoly in European derivatives.