Corporate raider Elliott puts bond trading arm in spotlight at the London Stock Exchange

The owner of the London Stock Exchange has been urged to launch a full-scale review of its operations that could lead to the sale of its New York-listed bond trading arm.

London Stock Exchange Group is being pressed by US activist investor Elliott to boost performance after a 33 per cent fall in its shares in a year.

Elliott, run by American hedge fund tycoon Paul Singer and known for shaking up firms it invests in, has built a stake in the British company.

And it is calling on LSEG to launch a £5billion share buyback.

While Elliott has not made specific requests over what the ‘portfolio review’ should conclude, it is understood that LSEG’s stake in Tradeweb is seen as a way of raising cash.

LSEG acquired a 51 per cent stake in the fixed-income trading platform when it bought Refinitiv for £20billion in 2019, and it is thought that selling down the holding may be more straightforward than offloading other parts of the business.

Tradeweb is listed in New York, with a value of £18.5billion – making LSEG’s stake worth almost £9.5billion. 

Elliott did not comment, while LSEG said: ‘LSEG maintains an active and open dialogue with investors, while remaining focused on executing our strategy.’

It is reeling from a global sell–off of stocks deemed at risk from the growing threat of artificial intelligence (AI).

The shares fell nearly 13 per cent in a day this month after the release of a new AI-powered legal tool by Anthropic sparked fears that the technology could disrupt LSEG’s data and analytics business.

LSEG boss David Schwimmer is likely to face questions about AI and Elliott’s proposals when the group publishes full-year results next week.

Richard Hunter, head of markets at Interactive Investor, said Elliott’s presence may turn out to be beneficial.

‘Stake-building can be seen through a positive prism in that the buyer sees clear value, particularly after the recent share price decline,’ he said.

‘If its presence can further lead to suggestions for improving the shape of the business and/or operational improvements, that would be an additional positive.’