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London Stock Exchange denies CEO being forced out

[LONDON] London Stock Exchange Group rejected claims by leading shareholder and activist hedge fund TCI that it was forcing out Chief Executive Xavier Rolet, saying on Monday it had followed a "proper governance process".

The exchange was responding to a letter TCI wrote to Chairman Donald Brydon calling on him to stop the search for a new chief executive immediately and resign, with the fund saying it had lost confidence in him.

TCI Fund Management, run by Chris Hohn and the LSE's fourth-biggest investor with a more than 5 per cent stake, said Mr Rolet's departure would damage shareholder value and it instead wanted his contract extended to 2021.

LSE announced on Oct 19 that MrRolet would step down at the end of next year, just under a decade after he took charge and transformed the company with a string of deals.

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LSE said on Monday that regulator the Financial Conduct Authority had been kept informed throughout the process of its plans to hire a new CEO, that Mr Rolet was helping pick his successor and was focused on his role as CEO.

TCI did not immediately respond to an emailed request for additional comment.

Mr Rolet, who joined the group from Lehman Brothers, said last year that he would leave if a merger with rival Deutsche Boerse went through. But the collapse of that deal in March meant the 57-year-old Frenchman opted to stay on for longer.

Mr Rolet's departure comes at a critical time for the LSE as the exchange bids to win a slice of Saudi Aramco's initial public offering, expected to be the biggest listing in history.

Mr Rolet is also liaising with governments and regulators over the impact of Britain's impending exit from the EU.

Chief among those challenges is that posed by rivals such as Deutsche Boerse, which is seeking to profit from any step by the European Union to move some clearing business away from London.

LSE-owned LCH currently dominates the clearing of euro-denominated financial instruments in Europe, but the future location of such trading is uncertain following Brexit.

TCI said on Friday it had met Mr Brydon and a senior independent director last week and did not get a satisfactory answer for Mr Rolet's departure. It said it would call for an Extraordinary General Meeting if Mr Rolet was not retained as CEO.