LSE to acquire Turquoise

Dec 21 2009 By nebusiness

The London Stock Exchange today announced a deal to acquire its loss-making rival Turquoise.

The agreement, which will see the LSE take a 60% stake in the smaller trading platform, will give it a trading presence across Europe.

It should also help repair the exchange’s relationships with the major investment banks.

Turquoise was set up in 2006 by a consortium of nine investment banks, including Goldman Sachs and Morgan Stanley, in an attempt to force the LSE to lower its fees.

It was officially launched in August last year, but has yet to make a profit and reported losses of £15.7m for last year after the financial crisis disrupted growth plans.

LSE will retain the Turquoise brand, but combine it with its 'dark pool' Baikal business. Dark pools are sites on exchanges where large trades can be executed for clients anonymously so they do not disrupt the market.

David Lester, the LSE’s head of IT, is expected to head up the new venture, which will be run as an independent operation.

The investment banks that founded Turquoise will hold a 40% stake in the new business.

In September the LSE announced it was cutting 12% of its staff in a move that would save it £11m a year.

Its pre-tax profits fell to £79.4m during the six months to the end of September, down from £127m during the same period of the previous year.