LSE profits fall on derivatives write-off

The London Stock Exchange announced its profits for the first half of the year had fallen by a third due to a drop in the value of its EDX derivatives unit.

Turnover at the exchange's derivatives service, which includes EDX London, remained more or less flat, rising only slightly from £3.6 million to £3.9 million. Given its disappointing performance, the exchange said it had decided not to invest in EDX any further. The goodwill associated with EDX was therefore written down by £19.4 million to £49.1 million.

The exchange said that it was keen to close the takeover bid period and would return £250 million to shareholders as soon as the bid period was over. The LSE has been in an offer period since Deutsche Börse's bid in December 2004.

EDX was the LSE's bid to enter the lucrative derivatives business after the failure of its bid for Liffe. However, it has been outperformed by rivals such as Eurex. In its most recent results, trading volume on EDX had risen only 6% year-on-year.