London Stock Ex

The London Stock Exchange has seen revenues fall, in a three month period that saw great uncertainty over the future of its IT setup.

The exchange may undertake an IT shake-up in the coming weeks, as it looks to switch technology and potentially cut jobs.

A spokesperson for the bourse described the LSE to CIO UK sister title Computerworld UK as an “IT operation” in an era where super-fast electronic trading has taken over.

Revenue at the LSE declined eight per cent in the three months to 30 June, year on year. It was £161.9 million and was hit by a decline in the number of customer terminals taking real time stock exchange data, down 6,000 in one year to 98,000. But it said this was offset by “good” demand for non-real time data.

There was also a large fall on its electronic order book, SETS. Revenue there fell 38 per cent year-on year.

Former Lehman Brothers executive Xavier Rolet, chief executive at the LSE, said market conditions would “remain challenging in the near term”. In a statement to the market, he said “the Group is taking actions to ensure we are in good shape and responding fast to changing markets”.

“A new, leaner organisation structure is taking effect, new trading tariffs for UK cash equities trading have been announced, and work continues to ensure the group is well placed to capture market opportunities,” he said.

But he gave no details on what changes will be made.

The exchange also said a "leaner organisational structure" had been put in place as the recession continued to hit the City, with cost savings being made from a "reduction in headcount".

A statement to investors did not make any reference to reports that the LSE is considering switching off its £40 million TradElect platform, a Microsoft-based electronis trading system.

The exchange experienced serious problems after network software problems took TradElect offline for seven hours last September.

An LSE spokesperson confirmed that the exchange was “very actively considering what we do next” with the platform. The LSE is expected to make a decision in the coming weeks.

Dropping TradElect would be a dramatic about-face for the exchange, which had heavily promoted its ability to rival newer, dedicated electronic exchanges, and plumbed millions of pounds into doing so. It runs on HP ProLiant Servers and Microsoft .Net and SQL Server 2000 systems, within a Cisco network architecture.

IT staff at the LSE face an equally uncertain future, with potential cuts on the horizon. Again, no details have been announced.

The exchange has faced stiff competition from dedicated electronic exchanges such as Chi-X. “It’s a technology arms race out there, and we always want to make sure we’re at the cutting edge,” the spokesperson said.

Elsewhere, the LSE is concentrating on Baikal, the dark pool – or anonymous trading – service that is live with smart order routing. Non-display order book trading is planned to follow later this year.