New LSE CEO Indicates Deal Appetite
The appointment of an investment banker as the new chief executive of London Stock Exchange Group suggests that the board in interested is a deal, but suitable targets will be hard to find, according to Octavio Marenzi, chief executive of capital markets management consultancy Opimas.
The exchange said this morning that David Schwimmer will become chief executive when he joins the group in August. Schwimmer spent the last twenty years at Goldman Sachs, most recently as global head of market structure and global head of metals and mining in investment banking.
Marenzi said in email to Markets Media that the appointment of an investment banker suggests that the board of directors is interested in closing some sort of deal, probably in the form of a merger with a larger exchange, or by merging with another similarly sized exchange.
“However, after years of trying to pull this off, it is difficult to see what direction this will take,” Marenzi added. “The large US exchanges would certainly be the obvious candidates, but after Deutsche Börse was rebuffed by regulators, such an acquisition would have difficulty obtaining regulatory approval.”
In its statement the exchange highlighted Schwimmer’s “strategic perspective on the drivers of growth and innovation in financial markets infrastructure” and his experience advising clients on mergers and acquisitions. Therefore, it is possible that the exchange could look to acquire an infrastructure provider, especially as regulators are encouraging a shift to electronic trading and central clearing across asset classes, and data will become increasingly important.
Another market participant told Markets Media that it is interesting that an investment banker was chosen, which indicates the importance of M&A to the exchange, both as an acquirer and a potential target.
Patrick Young, chief executive of Exchange Invest, said in his daily email newsletter: “Too late to bid for NEX alas but presumably he has a few months to reread appropriate materials and prepare for the job at hand of restructuring LSE and moving it forward as a more cohesive department store.”
Last month CME Group, the US derivatives exchange, announced an acquisition of NEX Group, the UK technology provider. CME said in a statement: “Combining NEX’s leading electronic FX and fixed income cash execution platforms with CME Group will improve trading technology and streamline access by reducing the number of touchpoints that clients need to trade across products. In addition, NEX’s premier OTC post-trade products and services complement CME Group’s derivatives clearing services. Combining these solutions will strengthen the NEX compression, reconciliation and processing businesses. The combination will also facilitate the development of innovative post-trade services and data offerings to further enhance cost-effective trading and risk management.”
Oscar Willams-Grut, senior reporter at Business Insider UK, said:
New LSE CEO David Schwimmer is surprise appointment in city:
BAML: "we have no prior knowledge of Mr. Schwimmer", "no ability to judge Mr Schwimmer"
JPM: "investors may be less familiar w/ David"
BAML, JPM, & UBS all expect strategy to remain unchangedhttps://t.co/URdEG406vh
— Oscar Williams-Grut (@OscarWGrut) April 13, 2018
Rob Young, BBC business reporter, said:
It will be 9 months after @xrolet left the #LondonStockExchange before David Schwimmer takes over. Big boots to fill. The #LSE has undertaken a "comprehensive global search" to find the new CEO. Maybe some turned it down after the public, bitter row that led to Rolet's departure
— Rob Young (@robyounguk) April 13, 2018
City analyst @mhewson_CMC says David Schwimmer "seems an odd choice" for #LondonStockExchange boss and it "also seems rather odd" he won't start work until August. He also wonders why they didn’t pick Joey… 😉 #LSE #Friends
— Rob Young (@robyounguk) April 13, 2018
There were also the inevitable jokes about actor David Schwimmer in Friends:
So David Schwimmer will take over as LSE CEO in August. I have an idea for how he could make his entrance. pic.twitter.com/OgTSwbuD26
— Naomi Rovnick 歐蜜 (@naomi_rovnick) April 13, 2018
Fraser made the announcement on her first day as chief executive of Citi.
Morgan Stanley now oversees $5.4 trillion of client assets across wealth and investment management.
An ecosystem has developed including crypto exchanges, banks, and new offerings.
Investors include Nasdaq Ventures, Goldman Sachs, BMO, BoA, AllianceBernstein, and MaC Venture Capital.
Investments in AI, blockchain, the cloud and digital technologies have become essential.