The London Stock Exchange Group has been in the headlines of late for its proposed merger with Deutsche Boerse Group, and perhaps another suitor, but until then LSEG’s David Weisbrod says there is much to do in the meantime.
Weisbrod, who serves a dual role as US country head of the USA for LSEG and CEO of LCH.Clearnet US, has been focused on providing more access to customers to the London market and its clearing facility.
(Weisbrod declined to speak about the pending deal with Deutsche Boerse.)
“We’re a big believer in open access, which enables market participants to use whichever clearing house they want or whichever exchange they want as it meets their own needs,” Weisbrod told John Lothian News at the FIA Boca Conference. “We don’t have a vertical silo which binds the participants to use the clearing house, the exchange, or vice versa.”
One area the exchange is pushing into is in portfolio margining. While this concept is nothing new and has been tried by several other exchanges, Weisbrod said that this version has some unique factors. LCH.Clearnet will allow the cross-margining of the OTC swap market against futures positions. The service will be open to any exchange interested in joining the group. Whether LCH.Clearnet can attract other exchanges in the space to join is unknown at this point, but many exchange clearing houses are looking at new ways to improve capital efficiencies with new capital requirements coming out of Basel III.
LSEG is also working on building its US business, which has been a recent growth story for the company. Weisbrod said the company has been growing its US business through LCH.Clearnet as well as its FTSE Russell Index business. It also has been growing its business via MillenniumIT, which provides exchange trading platforms, surveillance, clearing and settlement and other services to 40 markets worldwide, and via UnaVista, a global regulatory reporting, risk, compliance and data solutions firm.
“It used to be the London Stock Exchange companies represented a relatively small percentage of the overall revenues of the group,” Weisbrod said. “Today’s it’s over 25 percent of the overall revenue.”
Weisbrod sees even greater revenues ahead, particularly through ETF products from FTSE Russell, and expanded trading, clearing, technology and trade services in the US. The company will continue to push new clearing initiatives as well – such as cleared inflation swaps, FX clearing, credit default swaps and repos on LCH.Clearnet.
No doubt the sale of LSEG will continue to grab attention in the exchange space, but Weisbrod said the US operation will stay on course to grow its business across the board.