LSE cuts its prices and prepares for cash return

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The Independent Online

The London Stock Exchange yesterday answered Nasdaq's claim that it was "milking customers" by unveiling a string of price cuts.

It comes amid mounting speculation from analysts that the LSE could be preparing to outline a cash return well in excess of earlier estimates of £100m.

The return - probably via a share buy-back - will be unveiled in the exchange's second defence document against Nasdaq's £12.43-a-share hostile takeover offer that is likely to be unveiled today.

The LSE said the price cut would reduce its average revenue per trade over its SETS electronic trading system to £1.23 from £1.36 if it had been in force during the nine months to 31 December last year. The price cuts will be phased in between April and November.

In a statement, the LSE said: "The board believes that the tariff reductions, together with the introduction of [the new] TradElect [trading system], will stimulate new and additional trading activity and is confident that broker services will continue to deliver strong revenue growth."

The defence document will contain the LSE's expectations for volume growth during the next financial year. Bridgewell Securities analyst Katrina Preston said the combined reductions were estimated to equate to around £20m of annualised revenues.

Shares in the London exchange finished the day down 4p to £13.15.

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