LSE launches a bid to snap up Turquoise
THE LONDON Stock Exchange said yesterday that it has entered into exclusive talks with trading platform Turquoise, as its new chief executive Xavier Rolet continues his drive to regain market share.
The LSE said that the discussions “may lead to a transaction”, but declined to elaborate on the details of the potential deal.
Analysts have questioned how a buyer would value the loss-making multi-lateral trading facilities (MTF) which has a seven per cent market share, but gets most of its trading volume from its nine founding investment banks.
Rolet will look to ensure a continued commitment from the banks – Citi, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, BNP Paribas and Societe Generale – to prevent them taking that liquidity elsewhere after the sale. This could lead to any deal being at least part-funded by a stake-swap.
Rolet, who took up the top position at the exchange in May, has vowed to be “offensive, not defensive” in the fight against new MTFs, which hope to take market share from the LSE.
Taking over Turquoise would give the LSE access to faster technology and enable it to cut its tariffs, giving it an edge in the growing price war between platforms.
A deal with Turquoise, which launched last year, could lead to the LSE winning round the banks to become investors of its Baikal service, analysts said. The LSE could also merge Baikal with Turquoise’s dark pool. It would be the second deal of its kind for the LSE. Last month, it acquired Sri Lankan technology firm MillenniumIT in an £18m deal.
Turquoise’s chief executive Eli Lederman confirmed in August it had hired UBS to seek a buyer. A timeline for the sale has not been confirmed, but it is said that Turquoise will run out of funding by the end of the year.