LSE profits driven up by FTSE and clearing

LONDON- The London Stock Exchange's drive to become a bigger contender in the derivatives market helped to boost its profits by nearly a third last year, and company said it is poised to seize more growth opportunities in the evolving market.

The exchange said on Friday its profit in the year to March rose 30 percent to 442 million pounds ($699 million), on a 10 percent rise in revenue to 680 million pounds.

The performance was driven by the LSE's inclusion of the FTSE International business acquired late last year, and by revenue growth in its Italian clearing house, which was up 147 percent from deposits to Italian banks.

"Our full ownership of FTSE and our shareholder approved transaction with LCH.Clearnet will continue to transform our organisation," said Chris Gibson-Smith, chairman of the LSE.

LSE shares were up 5.96 percent to 1,021 pence at 11:09 GMT.

The British exchange paid publisher Pearson 450 million pounds in December last year for the half of FTSE it didn't own, a move that gave the LSE full ownership of the index provider and positions it to move aggressively into derivatives trading and clearing.

FTSE added 33 million pounds to the LSE's full-year revenue while the exchange also benefited from strong growth in revenue from its Italian clearing house which offers deposits to customers.

The LSE's CC&G clearing unit contributed 127 million pounds to Group earnings, an increase of 147 percent from 51.3 million pounds the previous year.

"These results are broadly in line with expectations, with earnings boosted by net interest income from the LSE's Italian clearing house and the inclusion of the FTSE business," said Richard Perrott, an analyst at Berenberg Bank.

The LSE and its rivals, such as Deutsche Boerse, NYSE Euronext and the Chicago Mercantile Exchange , are keen to move into derivatives clearing to tap regulatory reforms to force these complex asset types to use exchanges.

Accordingly, Xavier Rolet, who became LSE Chief Executive on this date three years ago, is working on an ambitious plan to diversify the LSE by moving beyond its core share trading business, into data, technology and clearing.

"We have made great progress this year," Rolet said in a statement on Friday. "We will continue to innovate across our markets, products and services and we expect to make further good strategic progress."

Last month, Rolet secured the backing of shareholders to buy 60 percent of European clearing house LCH.Clearnet, valuing the company at 813 million euros ($1.1 billion). ($1=0.6324 British pounds)

Source: Reuters