By Pushkala Aripaka
(Reuters) -London Stock Exchange Group said on Thursday it would sell 20% of its post-trade services business and announced a surprise 1 billion pound ($1.34 billion) buyback as it reported better-than-expected third-quarter results.
LSEG shares rose as much as 9% following the announcements by the London Stock Exchange operator, which also provides data and analytics and has been battling concerns that rising competition and artificial intelligence will squeeze its income.
LSEG, whose stock price has fallen by more than 15% this year, has responded by expanding its offerings to meet demand.
“For those who think AI models can scoop up so-called public data from the internet and displace us, that just does not reflect how this industry works, and fundamentally ignores the non-replicable nature of the vast majority of our data,” LSEG CEO David Schwimmer said on an investor call.
BANKS TAKE POST TRADE SOLUTIONS STAKE
A group of 11 banks, which are also among the founding members of LSEG’s SwapClear, are buying 20% of Post Trade Solutions for 170 million pounds and will also nominate three directors to the unit’s board.
The deal values the whole of Post Trade Solutions, which supports risk management and efficiency for uncleared derivatives, at 850 million pounds, LSEG said in a statement.
LSEG said it will also receive more surplus cash from SwapClear, which it jointly operates with the 11 banks to provide clearing services for interest rate swaps.
The share of SwapClear income going to the banks will be cut this year to 15% from 30%, and then to 10% from 2026, LSEG said.
RESULTS BEAT EXPECTATIONS
Meanwhile, LSEG’s third-quarter income and recurring revenue beat market expectations as it raised its 2025 margin forecasts.
LSEG said growth in its closely watched annual subscription value (ASV) would accelerate into the end of the year, after slowing slightly to 5.6% at the end of the third quarter, on an organic constant currency basis, from 5.8% at the end of June.
Its third quarter total income grew by 6.4%, excluding recoveries, better than the 5.2% forecast in a company poll.
RBC Capital Markets analysts said LSEG’s management was “being active in deploying capital and opportunistic in acquiring shares” after the announcements, with shares on track for their biggest one-day gain in more than three years.
Reuters provides news for LSEG’s news and data terminal Workspace.
($1 = 0.7451 pounds)
(Reporting by Pushkala Aripaka in Bengaluru; Editing by Tommy Reggiori Wilkes, Susan Fenton and Alexander Smith)