LSE chiefs 'up ante' in Liffe auction

The London Stock Exchange is to up the ante, and reveal a joint technology deal, in an effort to win the bidding war for derivatives exchange Liffe, reports said.

Chiefs at the London Stock Exchange (LSE) are, in a presentation to Liffe later on Wednesday, to reveal they are prepared to pay £16 per share compared with a former outline bid of £13, the Daily Telegraph said.

The LSE would also back the development of a joint dealing platform, the Financial Times said, reporting that the exchange intended on Wednesday to make a formal offer for Liffe.

The platform would be the world's first capable of dealing both shares and futures, the FT said.

Even though some exchanges, including Frankfurt-based Deutsche Boerse, run both share and derivative operations, they trade through separate platforms.

The joint Paris, Brussels and Amsterdam exchange, Euronext, and Deutsche Boerse are also believed to be mulling bids for Liffe.

High-risk strategy?

By focusing on technology, the LSE would also address long-standing concerns over the quality of its systems.

Swedish-based OM Group highlighted technological upgrade in its failed attempt to takeover the LSE last year.

But the exchange, in developing a new system, risks being dogged by the hitches and delays which frequently accompany the development of cutting-edge software.

LSE suffered a humiliating setback in the mid-1990s when a £400m project to install a new back office system, Taurus, collapsed.

Liffe is set to meet other potential bidders on Thursday, the FT reported.

Deutsche Boerse has reportedly offered to put all its derivatives contracts, except bonds issued by eurozone governments, through Liffe, the newspaper said.

Directors at Eurozone met on Tuesday to discuss an offer.