Shares in London Stock Exchange Group (LSEG) fell to the bottom of the FTSE leader board, losing 3.5% to £78.24 despite a strong third quarter trading update, as shareholders reflected on the lack of new news on costs and capital spending.
In March, investors took fright at the costs associated with the Refinitiv acquisition sending the shares down by 20%. The market was hoping for some additional comfort surrounding the ongoing costs of the Refinitiv deal from today’s update, but none was forthcoming.
LSEG’s three main business segments, post-trade, data-analytics and capital markets all witnessed good growth, contributing to a 7.6% increase in total income in the quarter to £1.69 billion.
Fixed income and derivatives trading was particularly strong, recording income growth of 21% on last year, while income from equities trading was also robust and increased by 15.4% to £60 million.
DATA GROWTH VALIDATES REFINITIV ACQUISITION
Investors will be encouraged that revenue for data analytics for the quarter jumped by 6 per cent. A key rationale for the Refinitiv acquisition is to transform LESG into a one-stop-shop for trading, data and analytics.
The combined group’s data offering will benefit from the increased adoption of algorithmic and quantitative trading, coupled with heightened demand for passive and multi-class asset investments.
SCALE AND SCOPE
The Refinitiv deal also enhances the group’s geographical scale and scope, specifically in the key markets of the US and Asia. In the latter, Refinitiv has deep relationships in the corporate market, as well as the buy and sell side communities.
Refinitiv’s presence in Asia, where it employs over 10,000 people, cements LSEG’s position in the world’s fastest growing financial markets.
The combination of Refinitiv’s foreign exchange and fixed income venues with LSEG’s equities, ETF and derivatives businesses will undoubtedly foster innovation and new product offerings.
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