LSE sees sales lifted in the third quarter

THE London Stock Exchange reinforced its position as Europe’s leading bourse yesterday with a solid third-quarter trading update yesterday.

The exchange beat analysts’ expectations with revenue of £165.9m in the three months to December, a six per cent rise over that period in 2009.

The increase was largely due to income from its central counterparty clearing business, which grew by a third to £38.7m compared with the same period a year earlier on the back of a 330 per cent jump in treasury management income.

But in a sign of growing competitive pressure from alternative exchange platforms such as Chi-X and BATS Europe, capital markets revenues fell four per cent to £69.4m.

Primary market income continued to grow, with new share issues up 75 per cent and revenue up five per cent to £19m, but the value of cash equities traded dropped 15 per cent in the quarter, and derivatives income fell by almost 20 per cent.

Strong growth in the money markets saw its fixed income trading division post a nine per cent gain and generate £8.3m – but overall secondary market revenue fell nine per cent.

Numis analyst James Hamilton said the LSE “has performed well over the last year with the improvement in equity markets,” but cautioned that “the competitive environment and inevitable long-run price compression” would hurt long-term growth.

Shares closed up 5.5p at 873p.