LSE seals deal to buy stake in Turquoise

The London Stock Exchange (LSE) has finally struck a deal to acquire Turquoise, a rival share trading platform that was launched just over a year ago to take on the LSE.

The London bourse will announce at 7am that it is taking a 60 per cent stake in the lossmaking platform and investing some £20m in the business. It is expected to retain and expand the Turquoise brand, which will be run as an independent operation.

The deal is set to end a long-running feud between the LSE and the nine investment banks that set up Turquoise in 2006 as a rival to the London bourse. It will give the LSE a pan-European equities trading platform.

Xavier Rolet, who took over as head of the LSE from Dame Clara Furse this year, wants to build closer relationships with his customers.

He intends to roll the LSE’s “dark pool” business Baikal (named after the Siberian lake) into Turquoise. David Lester, the LSE’s head of IT, is expected to head up the new operation.

The platform was officially launched last year by a consortium of nine of the world’s biggest banks – UBS, Morgan Stanley, Goldman Sachs, Credit Suisse, BNP Paribas, Societe Generale, Deutsche Bank, Merrill Lynch and Citigroup.

They founded Turquoise because they were concerned about the LSE’s “excessive” fees and its technology. The banks will keep a minority stake in Turquoise, which has so far failed to turn a profit despite offering lower fees and faster trading than the LSE.

The LSE, which declined to comment last night, entered exclusive talks with Turquoise in October.