Options for change

9 December 2002 By Jonathan Ford

Options for change

9 December 2002 By Jonathan Ford

Having failed to buy Liffe last year, it has struck a deal with the Swedish company that tried to buy it in 2000. This is very much a first step but one the LSE needs to take to offset its dependence on cash equities and information products.

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London Stock Exchange is partnering with OM – the Swedish exchange operator that launched a hostile bid for it two years ago – to create a new international equity derivatives market called EDX London.

The move is designed to establish LSE in the derivatives business, which it tried and failed to enter last year by bidding for Liffe, the London derivatives exchange. Liffe, which was bought by Euronext, has prospered as investors seek to hedge equity risk in volatile markets. Its revenues grew by 19% in the third quarter.

EDX will initially be built around the Scandinavian equity derivatives business of OM's London unit. EDX will operate this business but will also expand into providing a clearing and reporting service for overthecounter derivatives. LSE will have 76% of EDX and OM, 24%.

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