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LSE told Italy it won't move bond trading platforms - central bank source

LSE told Italy it won't move bond trading platforms - central bank source
FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville -
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Toby Melville(Reuters)
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By Elvira Pollina and Giuseppe Fonte

MILAN/ROME (Reuters) – London Stock Exchange <LSE.L> has given assurances to Italy that it plans to continue investing in its Italian trading platforms and does not intend to move them out of the country, a Bank of Italy source said on Thursday.

LSE Group owns Italian stock exchange Borsa Italiana, which in turn controls the MTS platform on which Italian government bonds are traded.

The Bank of Italy source was responding to a Reuters story that said LSE was considering shutting down a bond trading platform called BondVision and moving the management functions of Italian securities’ clearing operations from Milan to London.

LSE Chief Executive David Schwimmer held talks with officials from the Italian central bank and market regulator Consob in Rome on Thursday.

“In the meeting today LSE gave ample reassurance about its willingness to continue to invest in the Italian market infrastructures and that it has no intention to change (their) location,” the Bank of Italy source told Reuters, speaking on condition of anonymity.

LSE has guaranteed its full commitment to increase the efficiency of MTS and BondVision,” the source said, adding that the LSE would be conveying the same message to Italy’s economy minister.

Two Italian sources with knowledge of the situation had earlier told Reuters the LSE was mulling an overhaul of MTS ahead of a potential merger with data provider Refinitiv.

LSE declined to comment on Schwimmer’s visit to Italy and the content of the discussions.

The British group is moving ahead with a $27 billion (21.7 billion pounds) plan to buy Refinitiv after Hong Kong’s bourse scrapped an unsolicited $39 billion bid for the London exchange operator.

Thomson Reuters, a professional information company that is the parent of Reuters News, holds a 45% stake in Refinitiv.

The sources said Italian authorities were concerned that the rumoured overhaul would be a first step towards centralising actual clearing and post-trading operations outside Italy and would eventually lead to MTS being dismantled.

Italy, which has the world’s third largest public debt, considers the Milan stock exchange and its government bond trading unit MTS a strategic asset. Last month, it approved a law giving the government special powers to protect the Milan exchange from possible outside threat.

The BondVision trading platform is used by institutional investors, including the Bank of Italy, and mostly trades Italian government bonds, with a daily volume of 5-6 billion euros.

The sources who spoke about the possible overhaul said the plan the LSE was considering envisaged shutting down BondVision because Refinitiv has a similar bond trading platform, Tradeweb <TWO.O>.

One of the sources said that LSE was also considering moving the management functions of clearing house unit Cassa di Compensazione & Garanzia (CC&G) and settlement house Monte Titoli from Italy to London.

In London the LSE operates LCH, one of the world’s biggest clearing houses.

(Reporting by Elvira Pollina and Giuseppe Fonte, additional reporting by Giselda Vagnoni in Rome and Huw Jones in London, editing by Silvia Aloisi, Jane Merriman and Andrew Heavens)

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