The London Stock Exchange (LSEG) saw overall growth across its key businesses in 2023, with considerable improvement across data and analytics, capital markets, and in particular, post-trade.
David Schwimmer
The data and analytics offering saw a 7.3% year-on-year increase, while capital markets saw a 6.1% rise year-on-year as compared to 2022.
However, post-trade saw a double digit increase of 17.4%, driven in large part by the acquisition-minded strategy of the exchange over the last few years.
David Schwimmer, chief executive of LSEG, asserted that 2023 had been a strong year for the business, with every target set out at the time of the Refinitiv acquisition having been met.
He added: “In capital markets, we are collaborating more extensively with Tradeweb, creating new avenues for growth. We are also seeing an encouraging IPO pipeline for the London Stock Exchange. Our post-trade business is in the early phase of its next stage of growth, helping financial institutions manage risk and improve capital efficiency across the whole trading book.”
LSEG labelled 2023 an “outstanding” year for post-trade, having seen significant strategic progress. Key themes within the business unit were volatility, the migration of around 600,000 contracts in US dollars from LIBOR to SOFR, and regulation.
Specifically, securities and reporting revenue grew 7% to £254 million “as payments received relating to the early termination of the Euronext clearing agreement more than offset the in-year impact of lost cash equity clearing revenues and subdued equity market volumes”, while OTC derivatives revenue increased to £517 million, up 28.9%.
LSEG highlighted the importance of integration following the 2022 acquisition of Quantile, and Acadia.
LSEG moved to expand its capabilities in multi-asset post-trade services with the acquisition of risk management provider, Acadia back in December 2022 as part of its strategy to enhance and grow its multi-asset post-trade offering for the uncleared derivatives space, as Daniel Maguire, group head of post-trade at LSEG, explained at the time.
The Quantile transaction, first announced in 2021, was set to help the derivatives offering run more smoothly.
“Combined with our existing SwapAgent business and ongoing organic investment, we are now positioned to help our customers optimise capital, standardise processes and reduce risk across the whole OTC trading book – cleared and uncleared – significantly expanding our addressable market,” said LSEG.
In capital markets, the 6.1% increase was primarily driven by fixed income and derivatives. LSEG saw a growth of its market share, also spurred by acquisitions through Tradeweb, specifically that of Yieldbroker in the Australian market and algorithmic technology provider r8fin.
LSEG highlighted the importance of highlighted the acceleration of the Tradeweb collaboration, stating: “Tradeweb continues to drive the electronification of fixed income markets, and through constant innovation has successfully moved into new execution functionality, asset classes and geographies.”
Tradeweb completed its acquisition of algorithmic technology provider r8fin last month following the announcement of the deal back in November 2023.
Elsewhere, revenue in LSEG’s FX and equities businesses declined, down 1.9% and 8.8% respectively.
In FX, this performance “reflected lower industry volumes in [our] market segments,” said the exchange, while equities was put down to “subdued market volatility fed through to lower Secondary Markets activity”.
LSEG’s dealer-to-client platform, FXall, saw low activity from buyside participants, the report confirmed.
Read more: Fireside Friday with… LSEG’s Neill Penney and Bart Joris
LSEG is also continuing with the roll-out of Workspace within its trading and banking business – set to be largely complete by the end of this year.
The integration of TORA – acquired back in 2022 – is set to move to the OpenFin platform in 2024 in order to facilitate easier integration with customers’ own platforms. Importantly, due to the success of this strategy, LSEG is set to cease support for the Workspace predecessor, Eikon, in 2025.
The exchange’s results also highlighted various other recent acquisitions and their strategic importance – Acadia, Refinitiv, and LCH Group in particular.
LSEG acquired data and analytics giant, Refinitiv in a $27 billion blockbuster deal back in January 2021 following almost 18 months of deliberations. The transaction at the time was set to transform both the exchange and the wider market. The financial performance report credits the Refinitiv deal along with the increased ownership of LCH Group, as reinforcing its position in post-trade solutions.
The report also highlighted progress made following the 10-year strategic partnership between Microsoft and LSEG, launched back in December 2022 in a bid to develop innovative infrastructure solutions.
According to the exchange, there has also been good progress on the Microsoft partnership, with the first products expected in H1 2024.
“We continue to build the foundations for sustained, profitable growth across all of our businesses. In Data & Analytics, customers will shortly be using the first products from our partnership with Microsoft: together, we will transform how financial markets participants communicate, research, analyse data and trade,” said Schwimmer.
Elsewhere, the exchange also shared its intention to execute up to £1 billion of buybacks in 2024, with the intention of acquiring this directly from the Blackstone/Thomson Reuters consortium.
Speaking to the future outlook for 2024 and beyond, Schwimmer explained “we look forward to further progress […] our model – global, multi-asset class, and operating across the entire trade lifecycle – is proven to thrive regardless of market conditions, and we will continue to invest to deliver the best possible services for our customers and returns for our shareholders.”