LSE buys City watchdog's transactions monitor

The London Stock Exchange yesterday continued its attempt to diversify its business ahead of a possible bid, striking a deal with the City regulator to buy a reporting service.

The exchange, left reeling after its attempt to merge with the Toronto Stock Exchange was torpedoed by Canadian shareholders, will pay the Financial Services Authority £15m for its transaction reporting service (TRS). The LSE offers a rival service through its UnaVista system, launched in May last year, and said it would shift TRS clients on to its own platform "in due course".

Regulators demand transactionreporting to ensure that firms comply with the rules and that they are not engaging in illegal practices such as insider trading or market abuse.

Xavier Rolet, the LSE's chief executive, has been seeking to diversify the LSE's business away from just share trading since he became chief executive in May 2009. The exchange has long been seen as a "one trick pony", boasting the largest equity market in Europe but without a significant business in derivatives.

The exchange hopes to increase the range of clients it services through yesterday's deal, adding more hedge funds, money brokers, fund managers and stock brokers.

The failure of the Toronto deal has fuelled speculation that the LSE will fall prey to a bid within the next few months.