LSEG’s Schwimmer Defends Refinitiv Deal

David Schwimmer, chief executive of London Stock Exchange Group, said the acquisition of Refinitiv will make the UK firm truly global and boost its presence in China, as it rejected a bid from Hong Kong Exchanges and Clearing.

Schwimmer took part in a fireside chat at the Sibos conference in London yesterday.

Last month LSEG said it has agreed definitive terms with a consortium, including Blackstone and Thomson Reuters, to acquire Refinitiv for $27bn ( €24.5bn).

The chief executive said financial market infrastructure has gone through huge changes in the last 20 years as trading has become more electronic, FMIs have transformed from utilities to public companies and consolidated.

“The era of dynamism will continue and LSEG is where we want and need to be to enhance our position,” said Schwimmer.

He continued that Refinitiv allows the exchange to meet the three most important trends – the increasing importance of data, multi-asset class trading and businesses becoming more global.

“Refinitiv is in 190 countries and will be very helpful in Asia, especially in China,” Schwimmer said. “The deal truly globalises LSEG.”

He also highlighted the launch of Shanghai-London Stock Connect in July.

Shanghai-London Stock Connect is the first fungible cross-listing mechanism enabling international investors to access China A-shares from outside Greater China and allowing London-listed corporates to raise funds in China.

Huatai Securities became the first issuer to use Shanghai-London Stock Connect when the Chinese technology-enabled securities group raised $1.54bn through listing global depository receipts on the Shanghai Segment of London Stock Exchange.

“There are more listings in the pipeline,” said Schwimmer.

He added that London has been working on the relationship with Shanghai for many years.

”We view Shanghai as the financial centre of China,” continued Schwimmer. “The London Stock Exchange has been around for more than three 300 years and we do not take a short-term perspective .”

He said the transformation of China’s capital markets has been extraordinary and that capital controls will eventually be removed.

Charles Li

This month Hong Kong Stock Exchange launched a bid to acquire LSEG, which has been rejected by the UK firm.

Charles Li, chief executive of HKEX, also took part in a fireside chat after Schwimmer at Sibos yesterday. He disagreed with Schwimmer that China will relax capital controls.

“The relaxation of capital controls has been discussed for 20 years but will continue in our generation,” Li added.

Li continued that the world is being polarised between east and west and there needs to be an FMI that underpins both.

“Our big dream is to have a global FMI,” he added.”Together we complete each other and will be unrivalled across asset classes, currencies and time zones.”

Analysts do not except the HKEX bid to succeed. Li said: “I would reject the Charles Li takeover bid but we are willing to lose face and risk rejection as the opportunities are so large.”

There have been concerns over the governance of HKEX as the Chinese government can appoint board members but Li said that if the bid succeeds, governance is open to discussion.

Data demand

Schwimmer also explained there are attractive synergies between LSEG’s capital markets business and Refinitiv’s data. For example, Refinitiv has an ESG database while the exchange produces indexes for environmental, social and governance investing.

He also explained that Refinitiv has a broader business than just Eikon terminals. For example, Refinitiv also owns FXAll, a foreign exchange trading venue, and owns a controlling stake in Tradeweb, an electronic trading platform for fixed income, derivatives and equities. Tradeweb went public this year and will remain listed in New York

“LSEG does not a presence in FX, except for clearing, and it is the largest traded asset class,” Schwimmer added. “Tradeweb has terrific growth prospects and is the second largest traded asset class.”

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