London: The London Stock Exchange is set to announce a deal to take over its loss-making rival Turquoise in a move which would placate some of its most powerful investment bank clients, newspapers reported Sunday.
The LSE would take a 60-percent stake in the smaller pan-European trading platform under the terms of the deal, which could be announced as early as Monday, the Sunday Telegraph and The Observer reported.
The move would involve the LSE making an initial investment of 20 million pounds in Turquoise.
Turquoise was set up in 2006 by a consortium of nine investment banks, including Goldman Sachs and Morgan Stanley, in response to high trading fees being levied by the LSE.
Launched officially in August last year, it has yet to make a profit.
It is thought LSE will retain the Turquoise brand, but combine it with its `dark pool` Baikal business, named after a Siberian lake.
Dark pools are sites on exchanges where large trades can be executed for clients anonymously so as not to disrupt the market.
The reports said it was thought David Lester, the LSE`s head of IT, would head up the new venture, which would be run as an independent operation.
The investment banks that founded Turquoise would hold a 40 percent stake in the new business.
The Observer said the banks would likely receive payment in shares, providing an incentive for them to put business through the venture.
A takeover would be the latest attempt by new Chief Executive Xavier Rolet to stamp his mark on the LSE, Europe`s largest stock market.
The LSE has faced competition from new share trading platforms since EU regulators opened the doors to them in 2007.