London: London Stock Exchange reported a 19 per cent drop in full-year earnings per share as it racked up the costs of transforming the company, while pointing to a recent upturn in dark trading at subsidiary Turquoise.
Like other European exchanges, LSE has been losing market share to Chi-X and BATS, low-cost alternative platforms known as multilateral trading facilities (MTFs), since pan-European regulation opened the market to competition in 2007.
LSE has been fighting back by reducing fees, cutting post-trade costs and adding new businesses to diversify its sources of revenue, but the going remains tough.
LSE shares were unchanged at 650 pence at 0927 GMT yesterday.
Strategy
"The strategy amounts to a total re-engineering of our business over a two-to-three-year period," Chief Executive Javier Rolet told journalists. "The costs to achieve this are starting to come through, but the fruits of our labour have yet to be harvested."
The group's loss of market share is likely to continue at least until the LSE can upgrade its technology, Oriel Securities said. "The outlook should get better with modest growth being factored in for fiscal year 2011," it added.
Rolet said Turquoise, the pan-European MTF in which it acquired a controlling interest in December, rose to become the largest European dark, or anonymous, MTF for the first time on Thursday,
Its volumes jumped in the past few days while Chi-X and BATS showed declines, Thomson Reuters data showed. It had ranked as sixth-largest at the time of the acquisition, Rolet said.
Dark pools still account for a small percentage of the overall market but dark trading tends to be more lucrative for platforms than standard transparent trading.
To explain the gain, Rolet cited Turquoise's neutrality and said it was designed to protect confidentiality of information versus some other platforms designed for arbitrageurs.
