The London Stock Exchange has taken a goodwill impairment charge of £23.1 million on EDX London, the equity derivatives business it launched in 2003 with Scandinavian stock exchange operator OMX, and says it will not make any further investments in the venture.
EDX London was set up by LSE and OMX in 2003 to tap into the over-the-counter derivatives market, but the business has struggled to make any significant headway. The number of contracts traded on EDX in the first half reached just over 10 million, compared with 9.2 million in H1 2004.
LSE, which owns 76% of the venture, says that as a result of the poor take-up the Exchange will refrain from further investment in the unit, although the business will continue to operate.
Overall turnover for the LSE's derivatives services business, which mainly comprises EDX London, remained flat in the first half, reaching just £3.9 million, compared to £3.6 million a year ago.
In a separate statement OMX, which owns 24% of EDX, says it is too early to estimate the total net income effect of EDX on its own business.
The EDX charge, along with £2.6m in advisors fees related to the potential bids for the exchage, ate into LSE's first half operating profits which fell to £25.1 million, from £45.4 million a year ago.