Wall Street giants eye the London Stock Exchange

At a time when the London Stock Exchange is facing a decline in the number of listings and the dual challenge brought by artificial intelligence, the exchange has become the target of an activist investor from Wall Street.

Hedge fund Elliott Management has acquired a significant stake in London Stock Exchange Group and, following a recent sharp drop in share price, is pressuring CEO David Schwimmer to improve performance.

According to the Financial Times, which first reported the investment, the activist investor has urged LSE Group to launch a new multi-billion-pound buyback after completing the current £1 billion share repurchase program.

LSE Group shares rose 3.4% in early trading, ranking among the top gainers in the FTSE 100 index.

Elliott's decision to target the exchange operator comes as its share price has been declining for a long time: the stock has fallen nearly 18% this year due to concerns that AI might disrupt LSE's business.

Last week, Silicon Valley tech firm Anthropic released a new automation tool, sparking market fears that AI could bypass the existing business models of data providers and software companies.

While LSE Group is best known for operating the UK's main stock exchange, it also acquired a substantial data and analytics business through its $27 billion (£20 billion) purchase of Refinitiv in 2021. Refinitiv has since been renamed LSE Group Data & Analytics Division, providing financial market information and infrastructure services. Some investors are concerned that AI may offer similar analytics services in the future.

It is understood that Elliott has not demanded a split between LSE's data business and its core exchange operations.

After the recent weakness in the share price, several analysts have defended LSE's data business. Analyst Enrico Borzoni called the decline "completely unfounded" and stated, "In the medium to short term, AI is an opportunity, not a threat, for LSE."

Analyst Michael Werner believes the market has misunderstood the threat posed by AI, describing AI as "just retrieving data and generating results."

Even before the emergence of the AI threat, LSE Group was under pressure. In recent years, the number of IPOs in the London stock market has continued to decline: last year there were only 23 IPOs in London, far below the 114 in 2014. Over the past 12 months, the stock has fallen more than 35%.

Elliott, led by billionaire Paul Singer, is one of Wall Street's most formidable activist investors.

The firm acquired shares in a company last year, accused the oil giant of "long-term underperformance," and called for "decisive and effective leadership." Months later, the company's CEO Murray Auchincloss was abruptly dismissed in a late-night announcement.

Elliott, which manages $76 billion (£55 billion) in assets, has previously targeted other London-listed firms such as Anglo American.

Both Elliott and LSE Group declined to comment.

Editor: Li Zhaofu