LSE trading system under threat of takeover

The London Stock Exchange's (LSE) prized electronic trading platform could be ditched if the German Deutsche Börse exchange's rumoured £1.5bn takeover bid succeeds, according to a leading industry analyst.

There have been improvements in the robustness and performance of the Sets electronic trading system since version two was implemented in 2000 but it is seen as inferior to the rival Deutsche Börse platform, Xetra.

William Conner, lead analyst at Datamonitor, said there have been issues with performance despite the fact the LSE cited the robustness of Sets as a defence in the failed hostile takeover in 2000.

"Sets has proved to be incredibly stable and processes high volumes; however there have been some problems," he said.

The most high profile problem came in April 2000 when the entire LSE platform went down for a full day.

"The Deutsche Börse's Xetra platform is really regarded as being the best in class stock exchange system and we would see this as being a stronger platform than Sets," said Conner.

The Sets platform is historically based on HP's fault-tolerant NonStop servers but the LSE has indicated it wants to move to lower-cost commodity Wintel infrastructure.

No official bid has been made for the LSE as yet but both Deutshe Börse and the Paris-based EuroNext exchanges are circling. Conner was not prepared to say which way that might go but said: "If there is a successful takeover by Deutsche Börse I would predict the LSE going over to Xetra."

Either way it would likely be good news for Accenture, which implemented Sets and the Xetra platform for the Shanghai exchange.

The LSE did not respond to requests for comment.