LONDON Stock Exchange chief executive Xavier Rolet yesterday waged his own form of price war on the upstart rivals clawing away the group’s market share, claiming their business models are economically unviable at current pricing levels.<br /><br />Rolet’s remarks came as the LSE posted a 37.5 per cent drop in first-half pre-tax profit to £79.4m, hit by the market turmoil and aggressive pricing from new exchanges such as Chi-X, BATS and Nasdaq OMX Europe.<br /><br />“None of the MTFs can succeed in building their platforms with their current pricing levels,” Rolet said. “They are too low and structurally unprofitable.” He emphasised the need for new sources of revenue through innovation and investment in technology.<br /><br />But his remarks caused a storm among rivals, who claim they can sustain their ultra-competitive prices well into the future.<br /><br />Mark Howarth, interim chief executive of Chi-X, said: “The notion that our business model is unviable is entirely false. Chi-X has a very strong balance sheet and a strong pipeline of extra revenue lines at differing rates of profitability, all building on super-efficient technology investment – our prices are absolutely sustainable.”<br /><br />BATS Europe chief executive Mark Hemsley insisted his firm is capable of reaching profitability by gaining market share. “We also have the capability to provide more sophisticated products at the same competitive prices,” he said. “We operate at a much lower cost base than the LSE so can sustain a lower level of pricing.”<br /><br />Rolet said the LSE’s future market share would depend on cutting costs and rolling out new technology quickly, as well as on the future shape of the post-trade space. <br /><br />LSE first-half revenue fell nine per cent to £310.9m, including the cost of its $30m (£18m) acquisition of technology provider MilleniumIT.