Clearing house LCH stood out in LSE’s third-quarter results, with the money it generates for the group rising in part due to reforms taking place in the over-the-counter derivatives markets.
An October 20 interim management statement for the three months ended September 30 showed that LSE’s revenue from continuing operations rose by 15% year-on-year to £376.2 million. Revenue for the first nine months of the year rose by 11% to almost £1.1 billion.
Sterling’s weakness against the euro and the dollar since June 23 boosted the LSE.
And LCH was the standout performer as third-quarter income rose by 29% to £114.9 million year-on-year.
Xavier Rolet, chief executive, said: “This is another good performance, delivering growth across our core businesses while continuing to invest in a wide range of opportunities to drive future returns.”
The LSE said it remains focused on completing its merger with Deutsche Börse. The pair want to create a European powerhouse to rival competitors in North America and Asia. However, European antitrust authorities opened an in-depth investigation into the merger on September 28, when the LSE said it would consider selling LCH’s French operating subsidiary to address antitrust concerns.
During the third quarter, the LSE’s capital markets, post-trade services (Italy) and information services divisions all booked strong revenue growth. Earnings from technology services also rose.
LCH’s SwapClear unit cleared $ 506 trillion notional of interest-rate swaps in the nine months, up 29% year-on-year. Clearing members have been forced to clear interest-rate derivatives denominated in dollars, euros, yen and sterling since June 21, 2016 in Europe.
Credit default swaps, which command a premium in exchange for compensation in the event an issuer defaults on its debt, cleared at LCH’s CDSClear unit showed an even bigger jump. Notional cleared at CDSClear more than trebled in the nine-month period to €370.3 billion.
Even ForexClear, which does not benefit from a clearing obligation, saw an increase in notional cleared, up 48% to $ 1.2 trillion.