The London Stock Exchange has acquired a controlling stake in rival trading business Turquoise, in a further aggressive step to slash trading times and catch up with newer rivals.
The merger follows the LSE’s £18 million acquisition of MillenniumIT in September, a move that was aimed at replacing its troubled TradElect platform with a faster, Linux-based setup.
The LSE will take a 60 percent stake in Turquoise, which houses a ‘dark pool’ trading platform centred on trading large blocks of shares. Turquoise will be merged with the LSE’s equivalent business, known as Baikal.
David Lester, the LSE’s combative head of IT who has been working to slash sluggish trading speeds, is expected to become head of the new unit, which will retain the Turquoise name.
Turquoise was launched a year ago by a consortium of banks – including UBS, Goldman Sachs, Merrill Lynch, Citigroup, Credit Suisse and Morgan Stanley – specifically in order to provide a strong rival against the LSE’s dominant market position.
Efficiency gains from combining technology with existing LSE infrastructure and the new MillenniumIT setup, would be a clear benefit from the merger, the LSE said.
Xavier Rolet, chief executive at the LSE, said the merger meant the LSE could offer “an attractive range of innovative and competitively priced products and services across Europe”. The introduction of some of the LSE’s “new trading technology” to Turquoise would help the business grow in the coming years, he said.
The LSE expects to write off £20 million worth of exceptional costs from its books in the next year, primarily consisting of technology, as it merges the businesses.