Market volatility buoys trade at London Stock Exchange

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The Independent Online

The London Stock Exchange emerged as one of the chief beneficiaries of the global credit crisis yesterday, unveiling an unexpectedly strong set of first-half results that were buoyed by record trading levels.

The Exchange said trading volumes on its electronic order book over the six months to the end of September were 77 per cent higher than in the same period last year, as investors sought to reposition their portfolios during a period of financial turmoil.

"Increased market volatility over the summer added to the already strong growth experienced during the earlier part of the financial year," said Chris Gibson-Smith, the LSE's chairman. "Strong trading associated with credit market liquidity events and heightened activity in financial markets continued in September, with the month registering the second-highest level of average trading volumes, after the records set in August," he added.

Revenues from trading provided half of the LSE's total sales of £203.1m during the first six months of its financial year, with total operating profits rising to £114.7m, a 41 per cent increase on the same period during 2006.

Analysts said the extent to which the LSE had been able to boost trading volumes had confounded expectations. "The LSE's volume growth continues to surprise on the upside in 2007," said Daniel Garrod, at Citigroup, who said the exchange was increasingly competitive. "With Nasdaq selling its stake and LSE acquiring Borsa Italiana, the London exchange has turned from prey to predator."

The only credit crisis-related cloud on the horizon for the LSE is the potential for the turmoil to prompt a slowdown in the new issues market, from which the exchange earns around one fifth of its revenues. However, while several companies have postponed flotations in recent months – including the restaurant groups Gaucho Grill and Wagamama – with the number of floats on the LSE's main market down to 10 in October compared to 13 a year ago, Clara Furse, the exchange's chief executive, described the pipeline of future IPOs as "pretty good".