The latest rumour doing the rounds is that the serial
acquirer, the London Stock Exchange is weighing a bid to buy
FOW understands the rumours are false but, like any good
rumour, it is the plausibility of the suggestion that carries
it in the wind.
On the face of it, the acrimonious history between the LSE
and Nasdaq would rule out any bid.
But when you begin to think about the LSE’s
ambitions and its challenges, a deal to buy NLX might make
The LSE is currently in the process of developing a
derivatives platform to trade swap futures and interest
Like any new exchange it faces two significant challenges:
competition and connectivity.
At a time when banks and brokers are swamped with essential
regulatory updates, getting on the development list to connect
to a new exchange is a big challenge.
So too is persuading tech vendors to connect and waiting for
them to write to the new exchange.
This process can take up to a year in normal times possibly
longer in the current climate. All of this delays the launch
during the window of opportunity for swap futures.
Buying NLX would provide the LSE with a market ready
platform and mitigate the challenge of connectivity and set
The other element is competition.
NLX is also known to be planning a swap future launch and as
the LSE launch will also clear into LCH, there is the prospect
of two almost identical offerings fragmenting liquidity.
Whether Nasdaq would sell is currently an academic question
– Bob Greifeld has a lot of personal and shareholder
capital invested in NLX.
But the question might become more pertinent if NLX fails to
attract more banks and buy-side firms onto the market over the