LSEG Expects Refinitiv Deal To Close In Q1
David Schwimmer, chief executive of London Stock Exchange Group, said the potential sale of Borsa Italiana group will significantly contribute to addressing the European Union’s competition concerns about its purchase of data provider Refinitiv.
Schwimmer said on the LSEG’s third quarter results call today that the disposal is conditional on the Refinitiv deal being approved by regulators.
He added: “We continue to engage constructively with the European Commission on achieving anti-trust approval for the transaction and we believe the proposed divestment of the Borsa Italiana group will significantly contribute to addressing European Commission concerns.”
This month London Stock Exchange Group said it had agreed to sell Borsa Italiana group to Euronext for an equity value of €4.3bn, plus an additional amount reflecting cash generation to completion.
Schwimmer added that the net proceeds from the sale will be used pay down Refinitiv debt to allow LSEG to reduce leverage.
He continued that the proposed acquisition of Refinitiv continues to progress and detailed integration planning is well developed in preparation for completion. All remaining merger control, foreign investment and regulatory approvals are expected by the end of the first quarter of next year.
LSEG has received 15 merger control clearances including from the relevant authorities in the United States, Australia, Canada and the UAE. In addition, the group has received foreign investment clearance from the Italian government.
Total LSEG income for the third quarter increased 2% to £600m, taking the nine-month year-to-date total to £1.8bn, a rise of 6%.
David Warren, chief financial officer, highlighted the 11% growth in the real-time data business.
“This reflects our ability to deliver data away from terminals and through feeds and enterprise licences,” said Warren. “We can customize delivery and price for more products.”
Total Information Services revenues rose 1% to £223m in the third quarter.
David Schwimmer, CEO, @LSEGplc: “The Group delivered a resilient performance in the quarter against a challenging market backdrop while we continue to execute our strategic plans across our business.” https://t.co/sD0Pp6L6Gc pic.twitter.com/5aHlLVOhFh
— London Stock Exchange Group (@LSEGplc) October 23, 2020
Post Trade income was up 5% to £259m in the third quarter and up 14% on a nine-month year-to-date basis
“There was good growth in non-over the counter and net treasury income,” added Warren. “The decline in OTC revenues reflected lower SwapClear volumes compared to elevated prior year period.”
Capital Markets revenues were flat on the previous year at £102m in the third quarter, and up 8% on a nine-month year-to-date basis. The exchange said primary markets revenue increased but equities trading revenue was lower as a result of reduced market activity.
In August FTSE Russell, LSEG’s index business, announced an agreement with the Singapore Exchange to develop index derivatives on Asian and emerging markets, environmental, social, and governance and listed real estate index derivatives.
The collaboration builds on the existing FTSE Russell offering on SGX which includes index futures on the FTSE China A50 Index. Schwimmer said these index futures had 50% growth in volume in the the third quarter, with 29 million contacts traded.
A number of Libor rates will cease to exist at the end of this year.
Pension funds in Asia have significantly increased their international exposure.
Temporary equivalence is set to expire on June 30 2022.
Clients want short-dated options to hedge or trade with more flexibility around market-moving events.
IRS trading volumes have fragmented without an equivalence agreement.