LSE Group considers overhaul of MTS business in Italy: sources

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By Elvira Pollina and Giuseppe Fonte

MILAN/ROME (Reuters) – London Stock Exchange (L:) is mulling an overhaul of its Italian business MTS ahead of a potential merger with data provider Refinitiv, two Italian sources with knowledge of the situation said on Thursday.

The changes under consideration include shutting down a bond trading platform called BondVision, and moving the management functions of Italian securities’ clearing operations from Milan to London, the sources said.

LSE’s Chief Executive David Schwimmer was in Rome on Thursday to discuss the proposed changes with officials from the Bank of Italy and market regulator Consob, the sources said.

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

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

The British group is moving ahead with a $27 billion 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 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 said the plan the LSE was considering envisaged shutting down BondVision because Refinitiv has a similar bond trading platform, Tradeweb (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.

The sources said Italian authorities were concerned that the planned overhaul would be a first step toward centralizing actual clearing and post-trading operations outside of 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.

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