LSE 'cuts fees' in face of new competition

The London Stock Exchange (LSE) is today reportedly launching hefty fee cuts and incentives to help it fend off a raft of new equity trading rivals.

It is thought that the LSE is axing some charges altogether under the tariff changes as it ramps up the battle against incoming competition, according to the Financial Times.

Three rivals are said to be launching over the next two months offering trading in pan-European equities, with one of the incoming competitors – Turquoise - believed to be starting its first full week of operation today.

Turquoise, which is owned by nine investment banks, is entering its third week of testing and reportedly said today that it was confident of stealing a 5% market share by Christmas.

The other two soon-to-launch rivals, Nasdaq OMX Europe and BATS, are expected to open this autumn, with Nasdaq set to launch on September 26.

Platform Chi-X, which is majority owned by broker Instinet Europe, launched 14 months ago and is already said to have taken a 13% market share of all volume traded in FTSE 100 Index stocks.

The LSE is understood to be seeking a new type of trader with its fee overhaul to boost business, with plans to attract those that use complex computer algorithms, which drive large numbers of orders in quick succession.

These traders are seen as being increasingly important to exchange platforms, accounting for a greater proportion of trading volume.

The LSE has already been taking steps to defend itself against tougher competition, increasing its European reach with a £1.1bn (€1.35bn) acquisition of Milan-based Borsa Italiana.

The deal, completed last year, created Europe’s biggest exchange business.

The LSE has also been the subject of takeover interest itself, last year fighting off a hostile bid from US-based market operator Nasdaq, while it was also subject to stake-building by the Qatari Investment Authority and rival Borse Dubai.