Xavier Rolet who has been instrumental in turning the LSE into a diversified exchange group, has stepped down from the LSE as its CEO; its chairman Donald Brydon has opted to not stand for re-election.
In a significant development, Xavier Rolet, the CEO of the London Stock Exchange has stepped down, with immediate effect; its chairman has also stated it will not seek re-election.
The development marks a row over management succession issues with a top shareholder.
Earlier, Rolet had said he would leave at the end of 2018, but following activist hedge fund TCI’s accusation that Chairman Donald Brydon is pushing him out of the company, the LSE was forced to call a shareholder’s meeting to try and reverse the decision and instead oust Brydon.
The row comes a time when the LSE risks losing a big chunk of its derivatives clearing business to Deutsche Boerse due to Brexit and has dragged the country’s central bank, Bank of England, into the mess as well.
Rolet’s departure, after 8.5 years, could potentially trigger fresh speculations that rival exchanges, including ICE, could bid for LSE; however analysts say any mega-deal would risk significant hurdle from antitrust authorities.
“At the request of the board, I have agreed to step down as CEO with immediate effect. I will not be returning to the office of CEO or director under any circumstances,” said Rolet.
The LSE has stated that David Warren, its CFO, would replace Rolet on an interim basis.
TCI had no immediate comment on the announcement.
According to Michael Werner, an analyst at UBS, Rolet’s immediate departure creats a significant uncertainty over future strategy.
“With concerns increasing about the ability of (LSE unit) LCH to maintain share of the over-the-counter clearing business in a Brexit scenario, the timing of Mr. Rolet’s departure could pose a challenge for the firm defending its market share from Deutsche Boerse,” said Werner in a note to clients.
UBS has a “neutral” rating on LSE shares.
Rolet is credited with turning the LSE into a diversified exchange group by acquiring a controlling stake in LCH, one of the world’s biggest clearing houses. The Frenchman has also been instrumental in expanding the bourse’s activities in stock indexes.
TCI’s call to replace Brydon has received a strong rebuff from Mark Carney, Bank of England’s (BoE) governnor, who said, LSE’s succession plans should remain in place and that he was “mystified” by the spat.
The LSE stated, it has now asked TCI to withdraw its request for a shareholder meeting.
“If TCI does not withdraw its requisition in full, the board intends to publish a shareholder circular confirming among other things the date of the general meeting at which the proposed resolution or resolutions will be put,” said the LSE.
The circular would be published no later than November 30.