London Stock Exchange admits new venture may fail

Chief executive at the London bourse fears the regulatory burden may compromise success of dark pool trading system

One of the LSE's main projects may not succeed

London Stock Exchange (LSE) chief executive Xavier Rolet said that growing regulatory pressures may cause the failure of Baikal, the exchange’s IT-enabled "dark pool" trading facility.

LSE had high hopes for the block trading facility as a tool to fend off rivals such as Chi-X and Turquoise. But Rolet has now been quoted as saying the “regulatory evolution” that has taken place since Baikal’s inception may signify a major hurdle.

“If they [regulators] decide they want to regulate dark pools differently, or if they want to regulate internal crossing [networks] it could make venues like Baikal extremely attractive – or totally unattractive,” he told The Financial Times.

Rolet also told the FT that if Turquoise – one of the LSE’s smaller competitors, now up for sale – is not successful, others will also struggle.

Earlier this year, LSE told Computing that it was reviewing its technology set-up and looking to replace one of its core platforms, TradElect.

According to reports, the exchange may be looking at a cheaper alternative provided by a Sri Lanka-based firm. However, the LSE would not confirm the reports and said the IT review is still taking place.