The London Stock Exchange plans to launch a new market for the trading of corporate bonds aimed at retail investors, Xavier Rolet, chief executive, said.
Mr Rolet also said the LSE would expand its modest over-the-counter derivatives clearing business, but ruled out extending that to credit default swaps.
The initiatives are another sign of the changes under way as the chief executive, installed five months ago, cuts costs and expands the business in an attempt to revitalise the LSE’s fortunes.
Speaking on the sidelines of his first annual shareholders’ meeting, Mr Rolet told the Financial Times: “There is a clear need, particularly in the SME [small- and medium-sized enterprise] sector, for a lot of companies to able to tap the bond market, particularly for retail investors – and today there really isn’t a clear mechanism that’s transparent, with good technology.” He declined to say when the platform would be launched.
Currently, private investors wishing to invest in the corporate bond market must call a broker. But many brokers do not have access to trading in bonds in a market that is relatively illiquid.
The LSE said first-quarter revenue fell less than expected, by 8 per cent to £161.9m ($265.9m).
However, clearing, or post-trade, revenues were strong, showing that the clearing business acquired through Borsa Italiana is starting to provide significant revenue diversification.
The LSE faces competition from platforms such as Chi-X Europe and has seen its share of trading in FTSE 100 shares fall to 66 per cent, according to Fidessa. But the LSE derives only a quarter of its revenues from UK share trading.
Mr Rolet also hinted that the LSE would expand into equity derivatives, saying that while Borsa Italiana’s Idem equity derivatives exchange came third, behind the region’s two leading operators, “we are not going to let them sit comfortably in their leadership”. The two largest are Eurex, owned by Deutsche Börse, and NYSE Liffe.
LSE shares rose 23½p to 676p.
