The Times They Are Exchanging

21 May 2009

"Regrets I have a few, but then again, too few to mention,
I did what I had to do, and saw it thru' without exception,
I planned each chartered course, Each careful step along the by-way.
And more, much more than this, I did it my way."

So it's farewell to the "iron-lady" of Paternoster Square, as Dame Clare Furse yesterday stepped down as chief executive of the London Stock Exchange after eight years in the hot-seat. More Sinatra than Piaf, Dame Clara did concede that she had a few regrets. However, as always, she was resolute in her defence about fighting off the five takeover approaches during her tenure.

Never loved but always respected, financial commentators have treated the exit of "Queen Clara" with more affection than resentment. Platitudes aside, it's always been accepted that the worth of a CEO must be judged by whether they leave their company in a better state than they found it. Jeremy Warner in The Independent said that this question could be answered strongly in the affirmative.

Still, Dame Clara has left a mixed legacy and despite her vigorous refusal to sell the family silver and taking the LSE's share price to just short of £20, she exits the borse with shares trading at 689p and the institution lying sadly outside the FTSE 100. Perhaps the real black mark against her name was not snapping up Liffe, the financial futures market, back in 2001 – suffering the indignity of rival Euronext pinching it from beneath her nose and leaving the LSE without a world-class and highly lucrative derivatives operation.

Our attention now turns to Xavier Rolet, the great white hope, who takes over from Dame Clara with a strong reputation and genuine understanding of the LSE's machinations given his previous position at Lehmans – formerly the exchange's biggest client. Some have suggested that he's taking over at the perfect time, reaping the rewards if a recovery takes hold.

However, to affect such a change, a real evolution will be required. The European trading landscape has been transformed since the MiFID reforms of 2007. The market is increasingly fragmented and the traditional hegemony enjoyed by market stalwarts like the LSE is being increasingly challenged by multi-lateral trading platforms such as Chi-X and Turquoise. The LSE has also been slow to react to the threat posed by dark pools, which provide liquidity not displayed on order books, allowing traders to move large amounts of shares without revealing themselves to the market.

So Monsieur Rolet, to persist with the protracted musical motif, some advice below:

"You better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'"

JS